Will Fisackerly – SVP and Director of Corporate Finance Dan Rollins – CEO Bill Prater – Treasurer and CFO; EVP, CFO & Cashier of the Bank James Threadgill – EVP; Vice Chairman of the Bank Gordon Lewis – EVP; Vice Chairman of the Bank Ron Hodges – EVP; Vice Chairman & Chief Lending of the Bank.

Emlen Harmon – Jefferies LLC Michael Young – SunTrust Robinson Humphrey, Inc. Catherine Mealor – Keefe, Bruyette, & Woods, Inc. Matt Olney – Stephens Inc. Preeti Dixit – JPMorgan Chase & Co. Dave Bishop – Drexel Hamilton Kevin Reynolds – Wunderlich Securities Inc. .

Good day and welcome to the BancorpSouth First Quarter 2014 Conference Call. All participants will be in listen only mode. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Will Fisackerly, Senior Vice President and Director of Corporate Finance. Please go ahead..

Good morning and thank you for being with us. I will begin by introducing the members of our senior management team participating today.

We have CEO, Dan Rollins; Bill Prater, Executive Vice President and Chief Financial Officer; Ron Hodges, Executive Vice President and Chief Lending Officer; James Threadgill, Executive Vice President and Head of the Financial Services Division; and Gordon Lewis, Executive Vice President responsible for the General Bank.

Before the discussion begins, I’ll remind you of certain forward-looking statements that may be made regarding the company’s future results or future financial performance. Actual results could differ materially from those indicated in these forward-looking statements due to a variety of factors and/or risks.

Information concerning certain of these factors can be found in BancorpSouth’s 2013 Annual Report on Form 10-K. Also during the call, certain non-GAAP financial measures may be discussed regarding the company’s performance. If so, you can find a reconciliation of these measures in the company’s Q1, 2014 earnings release.

Our speakers will also be referring to prepared slides during the discussion. You can find the slides by going to bancorpsouth.com and clicking on our Investor Relations page, where you’ll find them on the link to our webcast, or you can view them at the exhibit to the 8-K that we filed earlier this morning.

And now, I’ll turn it to Dan Rollins for his comments on the quarter..

Thank you Will and good morning. Thank you for joining us today for BancorpSouth’s first quarter 2014 conference all. We continued to be pleased with the efforts and passion our teammates display daily as we work towards the goal and opportunities we consistently laid out.

I believe the results for the first quarter demonstrate clear and continued progress in several areas. I’ll begin my making a few brief comments regarding the highlights of the quarter and then Bill will discuss the financial results in more detail. James will provide some comments on our lines of business including mortgage and insurance.

Gordon will provide some insights on our lending efforts and general banking and finally Ron will discuss highlights regarding credit quality. After we conclude our prepared remarks, our executive management team will be happy to answer any questions you have. Now let’s turn to slide presentation.

Slide 2 contains our customary Safe Harbor statements with respect to certain forward looking information on the presentation. The next slide begins our review of the first quarter. I would like to focus also on the key highlights for the quarter. Net income for the first quarter was $28.4 million or $0.30 per diluted share.

On a per share basis this represents an increase of 36% compared to the first quarter of last year and 3% compared to the fourth quarter. Bill will discuss the components of net income in more details shortly. In January, we announced the signing of two bank merger agreements.

Ouachita Bancshares Corporation in Monroe, Louisiana, and Central Community Corporation in Central Texas. We discussed specific details regarding these two transactions in our fourth quarter conference call.

Our operational integration team continuous to work diligently preparing for the closing of these transactions and integration of these two banks into our organization. The OIB shareholders met and approved their transaction on April 8. The Central Community shareholders meeting are scheduled from April 24.

We anticipate being able to close two transactions shortly after receiving all necessary regulatory approvals. In addition, we have also completed two recent insurance agency transactions. We acquired GEM insurance agency in Houston, Texas during the fourth quarter of last year.

We are very pleased with the performance of Ed Shriver and his team and the contribution they were able to make to the first quarter. More recently on April 9, we announced the acquisition of Knox Insurance Group in Lafayette, Louisiana. We are excited about adding Dwayne David and Randall Bonaventure to our team.

We produced $31.6 million in total commission revenue for the quarter. This represents the largest quarterly commission total in our company’s history even without the $3.1 million contributed by GEM. Given the Knox transaction occurred after quarter end it had no impact on first quarter result.

James will talk more about this transaction as well as our overall insurance results in a moment. We reported net loan growth of $110 million or 5% on annualized basis. This represents our fourth consecutive quarter of net loan grown. Gordon will speak more specifically to our lending efforts momentarily.

Net loan growth combined with lower repricing of time deposits has allowed us to continue to maintain a relatively stable net interest margin. Although, it is not highlighted on the slide, we are also reported growth in deposits for the first quarter.

This is the second consecutive quarter of deposit growth following three quarters of decline that occurred while we were focused on reducing the cost to funds through deemphasizing single-service time deposits and public money.

While we quarterly increased this not large in terms of dollars or percentage, I believe it is important to our people to understand the significance of growing our entire balance sheet and all revenue streams not just loans. Finally, we continue to make progress and reducing cost.

Our total reported non-interest expense of $126.7 million represents the third consecutive quarter of improvement despite certain elevate personal related cost that are seasonally high during the first quarter. Bill will discuss some of these items in a more detail.

I will now turn to him for his comments on our financial performance during the quarter..

Thanks, Dan. If you will turn to Slide 4, you will see our summary income statement. Net income was $28.4 million or $0.30 per diluted share for the first quarter compared to $20.8 million or $0.22 per diluted share for the first quarter of last year and $27.7 million or $0.29 per diluted share for the fourth quarter of 2013.

With the exception of an immaterial amount of merger-related expenses, there were no items in the first quarter results that we consider to be non -operating. As a reminder, for comparative purposes we’ve recorded $6.8 million during the first quarter of last year to increase our litigation reserve for probable losses related to certain matters.

You will also notice on this slide the improvement in our net interest revenue. Net interest revenue increased from $98.1 million in the first quarter of last year to $105 million for the current quarter. Net interest income declined marginally on sequential quarter basis due to that count.

Our net interest margin was 3.54% for the first quarter of this year compared to 3.53% for the four quarter of 2013 and 3.37% for the first quarter of 2013. As Dan mentioned earlier, net loan growth is well as repricing of higher cost time deposits allowed us to hold our net interest margin steady quarter-over-quarter.

The other line item I would like to discuss on this slide is the non-interest expense. The total non-interest expense for the current quarter was $126.7 million compared to $127.8 for the fourth quarter of last year and $135.4 million for the first quarter of last year.

I would like to spend a few minutes discussing a couple of line items within that non-interest expense line. Specifically, I would like to talk about the sequential quarter increase in salaries and employee benefits which increased to $175.5 million from the fourth of last year $78.9 million for the first quarter this year.

$1.4 million of this increase was attributable to the employees we picked up from the GEM acquisition. There are about 50 of those employees with that agency purchase. Additionally, first quarter is seasonally high due to the FICA resets and 41(k) contribution associated with incentive comp payouts.

Payroll taxes in 401(k) match equates to $1.4 million compared to the fourth quarter as a calendar rolled over into the year. We also had about 500,000 above front cost associated with the additional of several mortgage produces. James will discuss that in more detail in a moment.

Importantly, even with the addition of employees I just mentioned, our employee headcount is now 248 positions from a year ago. Slide 5 shows a detail of our non-interest lines of business.

Total non-interest revenue was $66.5 million for the quarter compared to $65.1 million for the fourth quarter of last year and $71.3 for the first quarter of last year. Mortgage continues to face headwinds related to both production volume and margin pressure.

Insurance on the other hand continues to produce very strong results which – it has been further enhanced by the GEM acquisition. If you turn to Slide 6, James will spend a few moments discussing each of these areas in more detail..

Thanks, Bill. These tables a provide five -quarter look at our mortgage and insurance operations.

Our mortgage lending operations produce origination volume for the quarter totaling $197.1 million, mortgage lending revenue totaled $3.4 million for the quarter which included a negative MSR valuation adjustment of $1.5 million compared to revenue of $9.6 million during the fourth quarter of last year which included positive MSR valuation adjustments of $2.9 million.

Margin was 1.37% for the quarter, down from 1.79% for the fourth quarter of last year as lower volumes created additional margin pressure. As we continue to right size our production support staff, this should help improve our margins going forward.

We are also focused on hiring originated that have proven track record in a purchase market environment. During the first quarter we had a mortgage lending team that included 17 loan originators and support staff in Austin, Texas. The compliment the announced acquisition of first state bank of Central Texas.

So purchase volume remains strong at 73% of total origination which is comparable to the fourth quarter of last year. Activity appears to be picking up as we saw application volume of $559 million in the first quarter compared to $384 million in the first quarter of last year. Moving on to insurance.

Total commission revenues for the quarter were $31.6 million compared to $21.4 million for the fourth quarter and $26.7 million for the first quarter of last year.

As a reminder, the first quarter of each year is seasonally as a result of contingency commission received and the fourth quarter is seasonally lower as a result of the seasonality of the renewal cycle. The GEM team in Houston contributed $3.1 million of revenue during the first quarter.

If you remove that from the result, you’ll notice that our legacy team continues to generate strong organic growth. We are also excited about the recent Knox acquisition in Lafayette that Dan alluded to earlier.

Dwayne and Randall have done the excellent job building that agency and attracting a quality book of business for the lot of large commercial relationship. We believe their skills and expertise will be very valuable asset to our franchise.

Also the incremental product offerings and servicing that a company with our scale can provide will even enhance their ability to serve both current and future clients. Now I’ll turn it over to Gordon who will spend the few moments discussing the efforts of our lenders..

Thanks, James. We believe the results of the first quarter validate confidence previously expressed regarding the quality of our lenders and their ability to grow our loan portfolio. As you see on Slide 7, loan grew at annualized pace of roughly 5% during the quarter and our year-over-year growth rate is slightly higher.

This is the fourth consecutive quarter we’ve reported an increase following multiple quarters of decline. That we see normal fluctuations in business activity from week-to-week, the trend remain positive and our pipeline of approved loans at March 31 was higher than prior quarters.

Importantly, the increases in loans outstanding occurred across the major – the range of our major categories of lending. We reported our largest increases in C&I, consumer mortgage and owner occupied C&I loans. And these categories more than offset declines in other parts of the portfolio.

We are seeing improved loan activity in each of our four geographic regions. Three of those regions are showing increases for the most recent quarter and their growth was reasonably distributed across those major loan categories. As previously reported, our loan growth has been higher in our Southeast and Southwest regions.

Our specialized lending and leasing division also grew during the quarter. In our ongoing revenue of banking operations, we have identified three branches that have not performed at an acceptable level and those locations will be closed during the second quarter.

We believe we will be able to continue providing a high level of financial services to our customers through our remaining branch network and we anticipate no material impact on our loan and deposit balances from these closures. We continue to streamline our banking processes to improve efficiency and profitability.

As a result of the earlier retirement option offered a year ago and our ongoing focus on productivity, we’ve reduced FTE headcount in the general banking division of the bank during the past 12 months. The division’s salary expense declined by $2.3 million during the first quarter of 2014 compared to the same period in 2013.

We are also looking at our opportunities to grow and expand. In recent weeks we have hired lenders in Houston, Texas and Lake Charles, Louisiana to open loan production offices in those markets.

So those bankers are currently spending substantial time establishing their operations and calling on prospects, we anticipate their activities will provide additional loan growth in the coming months. This LPO model has worked well for us in the past.

And we will continue to consider entering new markets or expanding existing markets when opportunities to add experienced lending team arise. We believe we have the bankers across our footprint, capable of providing exceptional services to customers. These bankers drive our results and they have recorded many successes during the last year.

Our confidence in the future of our bank is based on their continuing commitment to excellence. I’ll now turn it over to Ron to discuss credit quality..

Thanks, Gordon. Slide 8 presents some highlights of credit quality for the first quarter. Total non-performing loans declines by $27.2 million or 22% during the quarter and total non-performing assets declined $32.9 million or 17%. We are pleased with all aspects of our credit quality improvement.

We continue to work through non-performing assets at a steady pace, both through the full closure and disposition process as well as through continued principal payments received on many of our non-accrual loans. OREO decreased $5.7 million or 8% from $69.3 million at December 31, 2013 to $63.6 million at March 31, 2014.

Total disposition for the first quarter were $8.8 million resulting in a net loss on sales of $500,000. We are pleased with our disposition efforts during the quarter particularly considering that first quarter is typically a seasonally slow quarter as well as the additional challenge represented by the weather this year.

Foreclosures and write-downs were $4.9 million and $1.8 million respectively. Near-term delinquencies representing loans 30 to 89 days past due reflect a decline of $5.4 million to $28.3 million or 0.31% of total loans at HUH-March 31, 2014.

There is no provision for credit losses for the first quarter which is consistent with now recorded provision for the fourth quarter and represents a decline from $4.0 million for the first quarter of 2013. And provision is not necessary due to continued low levels of net charge off and improvement in the quality of the loan portfolio.

It is not shown on this slide but our classified loan levels continue to trend downward. Substantially classified loans declined, substandard classified loans declined 4% quarter-over-quarter.

Net charge offs continue to remain at relatively low levels, net charge offs were $3.5 million for the first quarter of this year compared to $700,000 for the fourth quarter of last year and $5.9 million for the first quarter of last year. Recoveries continue to provide a nice benefit to net charge-off number.

Although they are somewhat volatile quarter-to-quarter and totaled $4.5 million for the first quarter, we expect recoveries to continue to be volatile as we move forward and mostly remain problem assets.

The percentage of non-accrual loan paying as agreed continues to represent a meaningful portion of non-accrual loans representing 57% of total non-accrual loans at the end of the first quarter. Cash payments of non-accrual loans continue to be the largest single contributor to the reduction in total NPLs.

We received cash payments of $23.2 million of non-accrual loans during the first quarter compared with $25.3 million during the fourth quarter of this year and this past year. Now moving to Slide 9, let’s take a closer look at several of the points that I just discussed.

The slide depicts sequentially comparable quarter comparisons of non-performing loans by classification. You’ll notice that quarter-over-quarter improvement that occurred across the board on a relatively consistent basis. NPL represented 1.03% of net loans and leases at March 31, 2014 compared to 1.34% at December 31, 2013 and 2.41% at March 31, 2013.

Slide 10 provides a visual of the significant improvement in NPLs, OREO and total NPAs over the past several quarters. I’ve already touched on the highlights of each of these metrics so I won’t go through that again. But I would point out that levels are approaching pre -credit cycle levels at 2008.

The next slide presents a visual of net charge-offs and annualized net charge-offs both in dollars and as a percentage of average loans for the last several quarters. Again, I have discussed specific numbers for the quarter already regarding charge-off and recoveries. Accordingly, I won’t spend any more time on that.

These conclude our review of the credit quality for the quarter. I’ll turn it back on Dan for few closing remarks..

Thanks, Ron. We continue to build on the positive momentum that we generated last year. We are producing growth across our company. Our lenders continue to win new businesses and grow loans; they are reporting deposit growth for the second consecutive quarter. Our insurance team has producing record results.

Our mortgage team is adding quality producers and continuing to explore ways to battle pressures on production and margin headwinds. In addition, the board transaction announcements that we’ve made over the last few months of bank and insurance, are reflecting of our desire and ability to growth through M&A.

We continue to have key wins in other areas as well. We have been able to maintain a steady net interest margin despite a highly competitive environment. Our credit team continues to work through residual pull on assets at steady pace and virtually all credit quality indicators continue to improve.

Bill spoke about the significant reduction in headcount from a year ago.

I would like to point that during the first quarter of this year, we’ve reduced headcount by 47 total positions before including the addition of 23 lenders and support staff associated with mortgage team pick up in Austin, Texas as well as the Lake Charles in Houston production offices.

This result in a net reported reduction of 24 full time equivalent positions. It is important for our team to continue to attract top talent as we continue to grow. Finally, we have consistently emphasized the importance of acting and spending money as an owner of the company.

One of the unique aspects of our company is the high level of employee ownership. Over 70% of our employees are by choice shareholders in our company. Either through our 401 (k) plan or through their personal holdings. I think our teammates have embraced this challenge and risen to the occasion.

Early in 2013, we asked for suggestions from across the organization on ways to cut cost. Our people responded with hundreds of great ideas.

We harvested the great deal of the low hanging fruit but we still have a very long list of opportunities that will continue to improve efficiency as our people continue to make spot spending decision on a daily basis. We believe we are back in the game.

Our people are excited and hungry and we are committed to continuing to find ways daily to enhance shareholder value. With that I’ll conclude the prepared remarks. Operator, we would now be happy to answer any questions..

(Operator Instructions). Our first question will come from Emlen Harmon of Jefferies. Please go ahead..

Hi, good morning, guys..

Hey, Harmon, how are you?.

I am doing good, thanks. Just to continue on the topic of kind of expense control, do you alluded to the kind of drop in employees during the quarter.

Was there kind of specific plan that you guys had kind of come to head here or is that just kind of constant focus that you mentioned having on expenses?.

No, I think there is no additional plan other than our retirement program that we announced last year. The ongoing reduction that we have seen now quarter-over-quarter-over-quarter is just the continuing focus on trying to analyze that to be more efficient at what we are doing.

I think if you exclude the GEM agency in the fourth quarter we actually dropped headcount in the fourth quarter also. So we’ve had consistent drop in headcount now for fourth quarters or more excluding the pickup acquired or added folks..

Got it.

And so it sounds like – it is obviously going to be to the kind of bumpy but you would expect that hopefully continue on that path?.

Yes, we are continuing to look for opportunities to improve efficiencies everywhere we can as we are able to use better technology. We hope that we will able to continue to do a good job of that..

Got you, thanks.

And then just on the LPO adds, could you give me a sense of kind of market that you are targeted with LPOs in the past and just kind of what type of markets you look at those? Whether there is geographic specifically or they are industry tied services kind of opportunistic hiring, give me a sense of kind of what you are trying to target with the LPO adds?.

I think the first I’ll let Gordon to jump in here second but I think the first time it would be the last statement you made is probably the best one there. Opportunistic adds for both that can help our team grow is the key there.

So as we look out and we look at opportunities that are before us, we need to be ready to take advantage of opportunities when they present themselves and we are consistently looking for good folks they can join our teams and customer focus, there are community bankers that can take care of customers.

So when we look at where we have done LPOs in the past and Gordon can give the specifics here, I know we’ve done LPOs across the spread of Louisiana and across the East side of Texas over the past probably 10 years or more I guess, Lafayette, Louisiana, Alexandria Louisiana, Tyler, Texas, Longview Texas, Lumpkin, Texas.

Albeit Alabama probably was one along the way so we got a long current record of attracting talent and growing through LPOs, and we are excited about the prospects that the Lake Charles, Louisiana piece adds for us, the folks are there, we have already had an insurance presence in that market.

And we are already down there in South Louisiana so this will just be a nice pick up in that market.

And then over in Houston, Texas where we are also have insurance presence and then we expanded the insurance presence with the GEM agency to pick up the look up the folks over there and ability to grow in that market really will be good for us as we look out into the future. And we are continuing to look for folks to add to those things.

Gordon?.

I would just reiterate what Dan said and finding the right people has been key for us. There are certainly markets that we view as attractive that are within our footprint and some only edge but we have not chosen to go into a market without having a team to lead us. And that’s been very successful for us.

I would say that our bankers have been key referral sources and recruiting sources for us as we find bankers to open new markets and we anticipate that will continue to help us as we go forward..

Our next question will come from Jennifer Demba from SunTrust Robinson Humphrey, Inc. Please go ahead..

This is Michael Young on for Jennifer. Just had a question about the core insurance revenues ex-GEM was up approximately $2 million year-over-year.

How much of that growth was due to like hardening in the market versus new relationships? Can you provide any color there on what drove the increase?.

I think James is ready to jump in here, Michael on– I think the answer is that the insurance team just like the rest of the bank is really got in terms of renewed focus on growing customer relationship. So I don’t know James if you got any specifics on hardening of the market. I think the majority of this just going to be customers..

Yes, Dan, that’s right. There really has not been much hardening in market. There are some specific clients that have gone up a little bit. But primarily this is going to be result of renewed focus and there is a lot of hard work..

I think lot of work; I have seen some customers that have some pretty significant declines..

Absolutely.

And then follow up kind of unrelated but the other expenses were good that lower this quarter.

Is this kind of better run rate you use going forward and then can you talk about anything that drove the change?.

Yes, I think we continue to look at our all of our expense structure, Michael so I think first part is I look forward, we continue to look for ways to reduce expenses but I do think that you are saying that some of the benefits or some of the changes that we have implemented, some of the initiatives that we instituted and some of the suggestions that came through, it came last year, we are continue to work down that list and we hope to continue to drive cost out of the system but Bill you probably have most specifics on, he is talking specifics I think about the other line..

That’s right. And why would in term was not operating I think we have discussed last quarter that we had a – as Gordon talked already about some of the branches that we are closing here in the second quarter.

Those decisions were made in late 2014 and there was some cost involved with buying out some leases and some things like that before the quarter. I mean sometimes you have a situation like that you have to incur a charge get some long term good out of decision like that. So we didn’t really have anything like that this quarter.

There are only about $0.5 million merger related gains. We don’t have that for a while..

Our next question will from Catherine Mealor of KBW. Please go ahead..

Good morning, everyone..

Hey, Catherine..

Hey, I am just could follow on Michael’s question on the other expense line. And just to clarify what Bill said.

So the higher branch expenses that you had in a fourth quarter, does that related to the three branches that you will be closing in the second quarter this year? Is that correct?.

Yes, we announced during the call in the fourth quarter, I think the total is right out in million bucks or million or two something. So it was one time cost in the fourth quarter, Catherine that obviously was not in this quarter that was related to those three specific closures..

Got it, okay, and perfect.

And then aside from the other expense line which came down nice so you also saw a nice decline in legal advertising deposit insurance assessment so could we think about those three lines as well as these are good run rate to model going forward or anything can seasonal or 1Q that would make those lines well on the first quarter you could possibly see an uptick in those as we go through the year?.

Okay, let me walk back you through the three years you talked about, I got two of them legal. If you can give us the answer how to much we are going to spend on legal cost in the future we would love that. We would like to see our legal cost continue to run down.

I think our legal cost continues to be elevated and is a source of irritation for me personally but I don’t know that – I don’t know that I can tell you that that’s a good rate, run rate on a legal side.

The other two you mentioned was marketing and what was the other one?.

And the deposit insurance assessment..

Deposit insurance assessment, that’s good one. I think on the deposit insurance side, Bill, you may want to jump in here but we are expecting to see a lower deposit insurance run rate for the year. May be not as well as we thought in the first quarter for the full year. But lower than the last year significantly..

That’s right.

You don’t learn until the following quarter exactly what your assessment from the previous quarter was, but of course you are accruing at all time and with the significant improvement that we have had and credit quality primarily, it’s hard for us to predict it because we don’t know the exact formula and I won’t share with us so – we came into the quarter as it turned out, came into this quarter a little bit over accrued and when I say this quarter I mean this first quarter of 2014 a bit over accrued so you could see that number rise but it wouldn’t be a meaningful amount..

And your final question was on marketing and advertising.

And I think seasonally the first quarter is the low quarter for those expenses but we continuing to challenge where we are spending our money to make sure we are getting value out of our marketing and advertising dollar, so I don’t know that any of those three areas are in different Catherine than any other expense line, headcount clearly is the biggest one for us.

We are actively trying to manage every line that we can..

Our next question will from Matt Olney of Stephens. Please go ahead..

Hi, thanks, good morning, guys. Hi, first question for Bill. It looks like the margin continues to perform pretty well.

Can you talk about the outlook for the margin and what some of the pushes and pulls are the next few quarters?.

Well, the pushes and pulls, we continue to grow loans. We still got a fairly sizable overnight position. As Dan mentioned we won’t grow deposits to offset part of that true and we need to with the loan growth that we have seen, we need to be focused on growing that so we can find the depositor, the loan growth when it happens.

Kind of quarter-over-quarter I would turn and we did is very flattish because while the net interest revenue dollar get hit by about 9000 a day due to day count we went from 92 day quarter to 90 day quarter, it also work close to a basis point per day the way that calculation works so we are really kind of, if you look at this has been a 92 day quarter, we will still hung in there right around 352.

Kind of going forward also, we had benefited from being able to re-price some of the CDs down, a big slug of that we have been talking about for a while occurred during this quarter and we won’t see any more of that until it is meaningful ways until little bit later in the year but – well really most of fourth quarter and early fourth quarter fortunately but growing the deposit is important to us and we need to be competitive and we recognize that but we don’t have to be overly aggressive because we still got a pretty good overnight position in cash..

Okay, that’s helpful. And as a follow up, Dan, based on your commentary it sounds like the two pending bank acquisitions are tracking on schedule.

Are you optimistic that we will see these deals close some time mid to late 2Q, is that fair?.

I don’t know if that’s fair or not, Matt. I think that where we are today is we are waiting on regulators and we are providing everything to the regulators.

In today’s environment as I am learning more and more it looks like there is really no normal in their process from scheduling so I wish I had a crystal ball I can tell you our expectations were certainly that we would close those transaction here in the near term.

I can’t tell you today, after visiting with regulators whether we will be able to make that schedule or not. I can tell you that we are intending to close as soon as we can, as soon as we get all the approvals..

And our next question will come from Steven Alexopoulos of JP Morgan. Please go ahead..

Hi, everyone. This is actually Preeti Dixit on for Steve. Most of my questions have been asked. Just a quick one again on expenses. You mentioned in that 24 reductions in headcount this quarter all of those moving pieces fully reflected in the run rate for comp expense this quarter.

And then just to follow up on the question on headcount, should we basically expect you to be able to offset new hires with further headcount reductions or are we getting closer to an inflection point there in your ability to take down headcount?.

Okay, I think I here two parts in there. You are talking about the first quarter when you look at the release it just shows the 24 headcount reduction. What I was pointing out was that while the release shows 24 headcount reductions, we added 23 people during the quarter. Those 23 people are in new markets for us.

Those 23 people will adding in Austin, Texas on the mortgage team, Houston, Texas on our loan production office there and Lake Charles, Louisiana on a loan production team there. Had we not moved into those three markets that bring market to us? We would have seen a 47 person headcount reduction that was I was trying to say.

Your question was on the full run rate. Well, I think those folks joined us throughout the quarter and the reducing of the 47 people that reduced were leaving us throughout the quarter. So I don’t know how to answer the full run rate part of your question, I am not sure I would understand that one.

And the second parts of your question I think was on are we in a [reflection part] where we can continue to reduce staff or not. And no I would tell you that I think we still got many efficiencies that we can drive through the system that will allow us to continue to be more efficient at what we are doing and be more with less people..

Okay, thanks for clarifying, Dan..

Our next question will come from Dave Bishop of Drexel Hamilton. Please go ahead..

Hey, good morning, gentlemen. Dan, quick question for you, I just want to confirm this.

The increase in the other insurance income, does that reflect the seasonal contingent commission from the seasonal payouts that you guys typically receive?.

Yes, and in the first quarter you got just seasonally high renewal business that will drive just a normal seasonal just because lot of renewals coming and at the end of the year in the first quarter and then you also have the contingent commission to come in based upon the past year’s performance. So all of that is in the first quarter.

James, you want to add anything to that?.

No, not really. It is like just like you said it is typically our biggest quarter of the year is always in the first quarter..

Right, right. And the just a follow-up, maybe just an overall comment in terms of the aggregate loan pipeline.

What you are seeing relative to the end of 2013?.

Yes, that’s a good question. Gordon I think commented that the pipeline is higher than we have seen in sometime the polar vortex one and polar vortex two, polar vortex three whatever those words that impacted many parts of the country.

We were a part of that; much of our footprint was not able to move around very much for a good part of the first quarter.

And I think – personally I think on the mortgage production side I think we definitely feel like that was impacted and we look at our mortgage pipeline it is higher than it has been in months and months, and we look at our internal bank pipeline it is not the highest, it has been throughout this company it is pushing those levels, the loan team is doing a great job.

We see production coming across our footprint, we feel really good about loan outlook on both sides of the aisle..

Our next question will from Kevin Reynolds of- Wunderlich Securities Inc. Please go ahead..

Thank you. Good morning, everyone. Dan, I will ask you, but feel free to toss this around. Most of my questions have been asked and answered. Pretty good quarter.

When we look at loan growth and I know you have talked about the seasonal factors and what impacted Q1 as you – if you take that out of the equation if you can and kind of look at the underlying demand improving or weakening and maybe business conditions in the region, I know the comment was made earlier than it seemed like the strongest regions that you have in your Company right now are Southeast and Southwest.

Can you drill down on any further in that and maybe provide some additional color on the nature of loan demand maybe in the pipeline as we go forward.

And then could you also talk about the competitive environment and have there been any change – I know it’s intensely competitive but has there been any changes for better or for worse with respect to rates and terms and some of the kinds of loans that you are not willing to match out there?.

Well, Gordon jumped on rates and terms piece and maybe you are seeing some other color on some of that and I will get Gordon to jump in here on some of that clear, I think you are really talking about the economy question more than anything else.

And I guess what I see and so take the seasonality out, that’s hard to do because when you look at back at the first quarter, the weather was an impact to us. There was and I am assuming it was an impact to lots of folks but our mortgage team; we had a couple of weeks of mortgage production that was probably lower than it has been in years and year.

And when you look at our weekly production today it is higher than it has been in a while and I think it adding that the weather impacted that.

When you look at the bank may be not as much of an impact in that way but in certainly does slowdown the processes in the quarter where the weather impacted us and we think we are seeing some pickup from that. But overall I think from an economic standpoint I think we feel like that our entire footprint continuous to improve.

The Southeast, Southwest to south part of us, Southeast for us is really Alabama and Southern Mississippi.

We’ve got some folks that are in Southern Alabama market that they done a fantastic job for us last year working, we are continuing to see opportunities there, that’s another one of those situations that we talked about earlier that’s an opportunistic hire with the team of folks that it done a great job of growing in a market for us down there and we are seeing benefits from that.

Southwest on the other hand, Louisiana and the Texas market, I think we are seeing pure economic benefit across that area, where in Southern Alabama piece the economy is not bad but that’s a pickup of people that’s helping us grow in that market more so probably than the overall economy and the overall economy in Texas and Louisiana which is our Southwest footprint, I don’t know if I can talk much about that, everybody talked about that already.

There is plenty of activity and plenty of things going on and in the Houston, Texas market where we expanded our insurance operation and now have lending team, the opportunity is there are large and I think we will see good opportunities there. Ron, you want to talk about pricing competition for a minute..

Yes, Dan, I think Kevin put it succinctly there is – everybody is very interested in expanding and increasing their loan portfolio, pricing is very competitive out there.

We are trying to get out portion of the pipeline and we are having to do some, fix some rates longer than we would have in the past but our competition is doing that also, what it’s better than the alternative, I think we are seeing some demand for loans across the board mainly I think our – seeing increases in C&I lending which has been very good for us.

We have been able to move in more into the market and diversify little bit out of our A&D portfolio of years passed but we have also seeing some increase in specific markets in the CAD portfolio also. I’ll let Gordon if he got anything add to that specifically..

Not really, Ron. We have seen good loan demand across the footprint in all the major categories as indicated earlier. That’s very encouraging to us.

And going back to Dan’s comments I don’t think anybody surprised by the fact we got great activity in the Texas and Louisiana and we are very pleased with what’s going on in Alabama and along the Mississippi Gulf Coast. The rate environment is very protective and we try to give our folks in the field a lot of latitude in that area.

They fight very hard to retain the business that we have and to gain new business. Underwriting is also very competitive but we are not as forgiving in that area. We have pretty – sets standards that we don’t deviate from we think that’s the way to go..

Anything else, Kevin?.

I think that pretty much sums it up. Thanks a lot and good quarter..

Thank you..

(Operator Instructions). In showing no additional questions. This will conclude the question-and-answer session. I would like to turn the conference back over to Mr. Dan Rollins for any closing remarks..

All right. Well, thank you very much. I think finishing on the loan growth question and the outstanding performance that we have been able to show there is a good way to finish. Thank you all for joining us today. If you need any additional information or have any further questions, please don’t hesitate to contact Bill Prater and myself.

Otherwise we will look forward to seeing you and speaking with you again as we are out on the road. Thank you all very much..

Ladies and gentlemen, the conference has now concluded. We thank you for attending today’s presentation. You may now disconnect your line..