Will Fisackerly - Senior Vice President and Director of Corporate Finance Dan Rollins - Chairman and Chief Executive Officer Chris Bagley - President and CEO John Copeland - Senior Executive Vice President, Treasurer and Chief Financial Officer.

Catherine Mealor - KBW David Feaster - Raymond James Emlen Harmon - JMP Securities Jennifer Demba - SunTrust Jon Arfstrom - RBC Capital Markets Matt Olney - Stephens, Inc. John Rodis - FIG Partners Blair Brantley - Brean Capital.

Good morning, and welcome to the BancorpSouth Third Quarter 2017 Earnings 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 the senior management team participating today. We have Chairman and Chief Executive Officer, Dan Rollins; President and Chief Operating Officer, Chris Bagley and Senior Executive Vice President and Chief Financial Officer, John Copeland.

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 2016 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 third quarter 2017 earnings release.

Our speakers will be referring to prepared slides during the discussion. You can find these 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 to Dan Rollins for his comments on our financial results..

Thank you, Will. Good morning. Thank you for joining us today for BancorpSouth's third quarter 2017 conference call. I will begin by point out a few of the highlights from our third quarter, John will discuss the financial results and Chris will provide more color on our business development activities.

After we conclude our prepared comments, our executive management team will be happy to answer any questions. Let's turn to the slide presentation. Slide two contains our customary Safe Harbor statement with respect to certain forward-looking information in the presentation. Slide three covers the financial highlights for the quarter.

Before we get into the details, I would like to take a few – I’ll make a few comments about the recent CRA exam results. Our management team has consistently communicated our belief we are meeting or exceeding all regulatory requirements and expectations as it relates to serving the communities in which we operate.

As we announced in an 8-K filing last week, our primary regulators have issued our 2017 CRA performance evaluation with a rating of satisfactory. We are thankful for their commitment to carefully consider all information that our team worked tirelessly to provide.

This positive resolution was a necessary step toward the closing of our two pending transactions. While it’s a Top Bankshares Corporation and Central Community Corporation. The necessary regulatory applications were refiled for these transactions in mid-August.

While we are awaiting for the required regulatory approval, our integration teams are working daily toward a goal of closing these transactions on January 1, 2018. However, we are unable to provide any assurances that these transactions will close timely or at all.

As we look at our results for the quarter, and as I’ve said for some time now, our story seems routine quarter-after-quarter. However, when this repetition reflects consistent improvement, quality earnings growth along with balance sheet and asset quality strengths, this is certainly a positive outcome for our company.

Net income for the quarter was $39.5 million of $0.43 per diluted share. There was no material MSR market value adjustment necessary during the quarter. Also there were no significant non-operating items in our third quarter results. Accordingly, net operating income excluding MSR was $39.6 million, which is also $0.43 per diluted share.

Quarter-after-quarter, we reached various milestones and records. This quarter, our earnings represent the highest level of net operating income excluding MSR in our company’s history. Our net interest margin increased to 3.58% for the third quarter from 3.52% for the second quarter of this year.

We continue to benefit from loan yield pick up as our variable rate loans reprice combined with our stable core deposit base. John will provide more color on the components of our net interest margin in a moment. Our credit quality continues to remain strong reflected by a modest provision of $500,000 for the third quarter.

Despite there are already low levels we saw continued improvement in several key credit quality metrics during the quarter. Chris will highlight some of these in a moment. Our total non-interest expense for the third quarter declined compared to both the second quarter of this year and the third quarter of last year.

Our results reflect continued discipline expense control in virtually all line items. John will discuss non-interest expense in more detail in a moment. This decline contributed to a slight decline in our operating efficiency ratio excluding MSR to 67.2%. We were active in the market repurchasing stock during the quarter.

We repurchased 700,000 shares during the quarter with a weighted average price of $28.99 per share. That leaves approximately 2.3 million shares available under our current share repurchase authorization which expires at the end of this year. We expect share repurchases to continue to be a part of our capital management plan going forward.

Finally, in July, we announced a corporate reorganization which will result in the merger of BancorpSouth Inc. with and into BancorpSouth Bank. In simple terms, this transaction will eliminate our holding company.

This decision is reflective of our continued efforts to simplify our operating structure and will eliminate duplicative regulatory oversight. The transaction has been approved by our shareholders and is expected to close upon receipt of required regulatory approvals.

I will now turn to John and allow him to discuss our financial results in more detail..

Thanks, Dan. If you will turn to Slide 4, you will see our summary income statement. Net income was $39.5 million or $0.43 per diluted share for the third quarter. There were no material non-operating items that impacted the results over the three quarters presented on the slide.

Additionally, as Dan mentioned, the non-cash MSR valuation adjustment was not significant during the quarter.

Accordingly, we did report net operating income excluding MSR of $39.6 million for the quarter, $0.43 per diluted share compared to $38.8 million or $0.42 per diluted share for the second quarter of 2017 and $36.7 million or $0.39 per diluted share for the third quarter of 2016.

Net interest revenue increased 5.2% compared to the third quarter of 2016 and 2.6% compared to the second quarter of 2017.

The linked quarter increase was driven primarily by continued expansion in our net interest margin, while the increase compared to the third quarter of last year was driven by margin expansion and growth in average earning assets. The net interest margin increased to 2.58% for the third quarter from 3.52% for the second quarter of this year.

We’ve said for several quarters that we expect upward pressure on asset yields as we reach repricing dates on our variable rate loans. Our loan yields increased for the quarter 4.33% from 4.27% for the second quarter of the year. Additionally, as Dan alluded to, the cost of our core deposit base remains very stable.

Our total cost of deposits increased only one basis point compared to the second quarter to 26 basis points. If you turn to Slide 5, you'll see a detail of our non-interest revenue streams.

Total non-interest revenue was $66 million for the quarter compared to $68.1 million for the second quarter of 2017 and $69.7 million for the third quarter of 2016. We have a more detailed slide dedicated to mortgage and insurance that Chris will discuss in a moment. The other line items on the slide are relatively stable quarter-over-quarter.

Slide 6 presents a detail of non-interest expense. Total non-interest expense for the third quarter was $126.9 million, compared with $127.6 million for the second quarter of 2017 and $128.3 million for the third quarter of 2016. As I mentioned earlier, there were no material non-operating items impacting the quarters presented.

One item I would like to point out is the salary and employee benefit slide and which essentially stayed flat compared to the second quarter of 2017 despite annual merit increases are being effected on July 1.

This was primarily the result of a decline in insurance commission revenue quarter-over-quarter, which resulted in a decline in commission compensation in that line item when comparing salary and benefits to the second quarter. That concludes our review of the financials. Chris will now provide some color on our business development activities.

Chris?.

Thank you, John. Slide 7 is a reflection of our funding mix as of September 30, compared to both the second quarter of 2017 and the third quarter of 2016. Total deposits and customer repos declined $141 million compared to June 30, 2017, and increased slightly compared to September 30, 2016.

We are pleased to see a continued growth in our non-interest bearing demand deposit accounts. This growth combined with disciplined pricing on interest-bearing and time deposits has resulted in a positive shift in our deposit mix. As Dan mentioned earlier, we have been able to hold our total cost of deposits in a very tight range.

As we look at geographical performance relating to deposits, we had three community bank divisions stand out this quarter for deposit growth. Our Memphis Metro, West Tennessee, and Northeast Texas divisions all reported excellent results this quarter.

As we move forward, our team will continue to stay focused on growing core deposits to support our loan production efforts. Moving on to slide 8, you will see our loan portfolio as of September 30, compared to the second quarter of 2017 and the third quarter of 2016. We reported net loan growth for the quarter of $37 million or 1.3% annualized.

Loans were up $397 million or 3.7% compared to September 30, 2016. We did experience some loan growth headwinds this quarter, first the hurricanes in the Gulf adversely impacted our Gulf Coast footprint, particularly our newer Texas markets in Houston, which had contributed a meaningful portion of our loan growth over the last several quarters.

Additionally, our line utilization was down compared to June 30. While line utilization is still well within historical ranges, the decline provided a headwind to our loan growth efforts for the quarter. With that said, our loan pipeline remains relatively stable.

We are optimistic that our efforts of our lenders will continue to result in net loan growth as we look forward. As we look at our third quarter loan growth from a geographical perspective, we had several divisions produce meaningful loan growth for us.

Stand-out divisions for the quarter were our Dallas, Texas, Northeast Mississippi, Northeast Arkansas and South Louisiana divisions. Slide 9 contains credit quality highlights summary. I’d like to touch briefly on a couple of these bullets. Our credit quality metrics remains strong across the board.

As Dan mentioned, we had a provision for credit losses, $500,000 for the third quarter compared with a provision of $1 million for the second quarter of 2017 and no recorded provision for the third quarter of 2016. We saw another meaningful decline in non-performing assets. Total NPA declined $8.4 million or 11% compared to June 30.

NPAs and net loans and leases have declined to 0.64% or 64 basis points., compared to a loan – compared to a year ago, non-performing loans have declined from 85 basis points to 59 basis points and ORE is now below $6 million as of September 2017.

Moving on to mortgage and insurance, the tables on the Slide 10 provide a five quarter look at our results for each product offering. Our mortgage banking operation produced origination volume for the quarter totaling $342 million. Home purchase money volume was $263 million or 77% of our total volume for the quarter.

Deliveries in the quarter were $314 million, compared to $264 million in the second quarter of 2017 and $424 million in the third quarter of 2016.

Production and servicing revenue, which excludes the MSR adjustment totaled $7 million for the quarter compared to $7.6 million for the second quarter of 2017 and $9.3 million for the third quarter of 2017. Our margin was 1.53% for the quarter representing a decrease from 2.19% for the second quarter of 2017.

This margin decrease is attributable to decline in our mortgage loan pipeline as we move into the seasonally slower time of the year. Our pipeline was $233 million at September 30 compared to $271 million at June 30 2017. Finally, as Dan mentioned earlier, we the MSR valuation adjustment during quarter was not significant.

Moving to insurance, total commission revenue for the quarter was $28.6 million compared to $31.1 million for the second quarter of 2017 and $28.2 million for the third quarter of 2016.

Our insurance team has experienced some key large customer wins which has allowed us to report year-over-year revenue growth in spite of continued softness in the market.

A reminder that the insurance business is seasonal for us and our fourth quarter insurance commission revenue has historically declined approximately $3 million from the third quarter. We expect this trend to continue as a result of the seasonality in this book of business. Now I’ll turn it over to Dan for his concluding remarks..

Thanks, Chris. We have a lot of momentum right now as a company and our teammates have a lot to be proud of. The successful completion of our CRA exam is a huge accomplishment for our company. The results of this exam validates the hard work and effort that our frontline teammates have invested daily in serving our communities.

Additionally, the receipt of this regulatory exam is another important hurdle, we have now cleared as we continue to work diligently to be able to execute our strategic plans. Despite the obstacles we have encountered, we’ve consistently reported improved financial performance quarter-after-quarter.

Our management team is excited about the direction we are headed and we believe there continues to be a long runway ahead of us for earnings growth and improved performance. With that, operator, we'd now be happy to answer any questions that you may have..

All right. We will now begin the question answer session. [Operator Instructions] And the first question comes from Catherine Mealor with KBW. Please go ahead..

Thanks. Good morning. .

Hey, Catherine, how are you?.

I’m good.

How are you?.

Good..

Good. Congrats on the CRA rating. Really exciting to see. Wanted to focus most of my questions first on the fee, looking first at the insurance revenue that came down linked quarter.

Can you just give us any kind of commentary on what drove that linked quarter decline? Just – was it just softness in the market or anything else we can talk – you can talk to more – I appreciate the guidance into next quarter, that seasonally was – we’ve very much seen over the past few years.

But as we kind of think about what are the organic year-over-year growth rate should look like in the insurance business might be helpful?.

Yes, that’s a great question. I think, part of that is, you know, you just don’t know what’s being sold in what quarter and the lumpiness of – you get all of that revenue any time you sell a policy. We are not big into excuses. So I think the life sales third quarter is always similar to what was there in the second quarter. We lost a little momentum.

My guess is, as you know, about 10% or a little more of our volume is driven out of the Houston market and they shutdown for basically a month down there trying to take care of the issues around the storm. But again, I think our teams out everyday are trying to fight for business and win business and we think we are winning more that we are losing. .

Okay, that’s….

Chris, do you have anything to add?.

No, that was a good explanation. What I think, we always look at it from a year-over-year perspective, because there is seasonality in those quarters. And so, it’s not exactly always perfect timing to – we know first quarter is good, but some of that rolls into second and you can always predict all of that.

But it is more of the year-over-year comparison the way we are looking at it. But, Dan is right. The hurricanes in the Gulf impacted a lot of our business, especially in the Houston market..

Okay. And then, a second comment or a question on the margin. I mean, your margin expansion this quarter was so good. I don’t think I’ve seen our deposit beta is strong as yours this hard this quarter. So first congrats on that.

As we think about the margin moving forward, could you argue that some of your ability to maintain deposit cost with that growth was a little slower this quarter and so as we have growth improve over the next couple of quarters into next year, that may put some incremental pressure on your deposit betas and so as we see the next couple of rate hikes, maybe you won’t see, we won’t see as much of a improvement in your margin or you might thinking about it too simplistically?.

Yes, I don’t know that I could argue with you because I don’t have any facts in front of me to tell me that your logic is fraud. But I don’t know that the deposit flows that we experienced for the quarters were that rate dependent. So I think our team is out there every day looking to grow deposits and is asking for deposits.

I think we improved our deposit mix. For the quarter, we actually grew free money in the quarter which is some of what you see helping on some of that. I think we can continue to win business.

John, do you want to add on margins?.

Yes, Catherine, we continue to look at the opportunity on the asset side that we have to experience repricing on a variable rate portfolio and the numbers that we are running project that given no increases in rates that we would see some positive repricing on the other side of that equation.

So combined with the capability of increasing the yield on the repriced variable rate loans versus the improved deposit beta as you mentioned, we think we’ll continue to see some upward movement in that margin in the next foreseeable quarter or two..

And one final one on the margin.

Any – can you provide us an update on how you believe the margin will be impacted from the two pending acquisitions?.

I don’t know that we’ve run numbers on margins specifically. You’ve got all the mark-to-market accounting adjustments that will flow through there. So, obviously if there is accretion income, that’s going to change, because we have no accretion income in our margin today. .

And you’d got that combined with we’d have to put their information into our model to have a good really understanding of it. So I don’t know that we have any clarity on that..

Okay, fair enough. Thank you..

Thank you..

The next question comes from David Feaster with Raymond James. Please go ahead. .

Hey, good morning everybody. .

Good morning. .

Congratulations on getting another – getting the positive results on your CRA exam and I just kind of wanted to follow-up on that last question.

With the pass to the pending deals closing increasingly visible, how do you think about your original expectations for the deals? Has your thoughts on cost savings or loan marks or earnings accretion changed at all? And maybe could you remind us of the pro forma capital levels once they do close?.

Yes, we’ve put out several things along the way. I think from a capital perspective, the transactions are give or take 90 basis points dilutive to capital. We’ve not put out any projections on accretion in dollars or in cents per share. But I don’t think we’ve seen a lot of change. If we’ve seen any change it’s been an improvement.

So, it’s been a long time since we first announced these transactions and the economy has gotten better every year since then. So what you see is, is both of the banks are much better banks today. Asset quality-wise than they were when we made the transaction as are we.

So their performance and our performance has mirrored each other from an asset quality perspective. So, the original loan marks that were out there will not be there and again, just like us, our total loan loss reserve is actually lower today than it was four years ago and I think the same thing applies to those two organizations.

On the cost save front, we clearly expect to be able to build in some operational savings and through our integration process.

I think some of those savings may already be in place because the two banks have been running fairly lean as we’ve been working through this process because they knew that there were folks and positions that were at risk as we’ve put our two banks together, those people know what’s happening and we know where we are and the timeline working towards that.

But I think from the original projections, I think our cost save number will be there. Maybe we just get to the get to the cost saves quicker under the current scenario because it’s been so delayed and so long and happening. .

Okay, that’s helpful.

You guys have done a great job controlling costs even in the phase as you’ve pointed out merit increases kick in, in this quarter, could you just talk about your thoughts on expenses going forward and your ability to further rationalize costs and balancing that out with continued investments in your business and where else do you need to continue to invest in?.

Yes, I think we want to continue to invest in anything that benefits us and helps us be stronger, faster, quicker, more profitable in all the things that you want to invest in that are good for our company. The revenue producing, the efficiency generating, those are things we are spending money in today. We’ve been spending money on technology.

We’ve been spending money on people to produce for us. We’ve expanded in different places to do that. So, I don’t see any change there from the investment side. We want to find ways to grow our organization. When we talk about the expenses, I think we continue to challenge the money that we are spending every day.

We continue to challenge, are we making good decisions and I think we are seeing quarter-after-quarter-after-quarter-after-quarter of that progress. We basically held expenses flat for three, or four or five years now and as we look forward into the 2018 budget, we are working on that now.

We are looking for ways to continue to make sure we can manage our expenses prudently. .

Okay, thank you. Last one from me, credit quality has continued to improve and NPAs ticked down again nicely this quarter.

Could you just give us your sense – your thoughts on credit going forward? Maybe where you are comfortable with the reserve going and your thoughts on the provision?.

Yes, provision and reserve is all driven off of the model. So I wish it was as simple as we decided that we wanted to be at x percent and when we plug the number and make it work from there, but that’s not the way it works. So, that’s not there. But when you talk about credit in particular, I think we are very pleased with where we are.

Ron Hodges, as you know retired from last quarter to this quarter and we’ve made some changes in how we manage and who is in those chairs, but the credit quality today is very strong.

I think Ron has said now for multiple quarters in a row that our credit quality is good as we’ve seen as a company in our company’s history and we think it is – we think we are at a level where it would not surprise us to see a bounce up or a bounce down for the last two or three quarters.

We’ve actually written down a little bit further each quarter. But again one or two loans at these levels can move the numbers pretty significantly for us.

Chris, do you want to add on that?.

Very proud of our credit metrics. They are very good. That’s phenomenally low ORE number. We have a great process in place. I am proud of our team. Dan is right. I think when you’ve got credit metrics like this, it wouldn’t be unusual for them to bounce around a little bit.

But I would also say that we are very focused on credit quality and we’ll continue to try to manage it as best as we can. We believe in good credit quality..

Are you seeing any signs of weakness in any parts of our credit books?.

No, it’s a loan-by-loan issue at this point in time. No geographic, no industry, obviously, we’ve experienced some or saw some oil and gas type residual stuff in those markets, but nothing that we can tie to it large number or concentration you see. .

Appreciate your questions..

Thanks. .

Next question comes from Emlen Harmon with JMP Securities. Please go ahead..

Hey, good morning guys. .

Good morning..

Dan, if the CEO thing doesn’t work out you may have a clear as an analyst. So good job with the redirect on the question there. A quick one from me. .

Or a politician?.

Getting back to the insurance business. Can you talk about your expectations for placing kind of – do those changed at all with some of the natural disasters or events that we’ve seen this past quarter..

Yes, it may be too early to tell.

Clearly, as the claims are being paid, the hurricane that hit Florida, the hurricane that hit Texas, the hurricane that came across the Caribbean and hit Puerto Rico, all of those can certainly have an impact, but I think it might be little too early to tell what the claims numbers are and what carriers are being impacted.

Property and casualty on the coast line may certainly see some pricing stability or maybe some pricing move up. But I really think it’s too early for us to tell what the real impact will be. .

Got it. That was it for me actually. Thanks guys. .

Thank you..

Next question comes from Jennifer Demba with SunTrust. Please go ahead..

Thank you. Good morning. .

Hi, Jenny..

Hi, sorry if I may have missed this.

Did you make any kind of provision for the hurricane impact? Or was it just a matter of business disruption?.

Yes, we did not, the dollar volume, there were no specific dollar provisions on hurricane. The dollar volume for us directly in that path is relatively small. We’ve talked to our customers down there. I don’t see anything that’s going to move the needle in any material way. So we did not have any specific numbers attached to any of the hurricanes..

Okay. Then I am assuming you are able to close the two pending deals at the beginning of 2018.

At what point do you think you’d be back looking again for more acquisition opportunities?.

Well, I think we need to certainly be able to digest what we’ve got on the table today, but I think part of the M&A market is building relationships and talking to people and understanding the needs of the folks out there that may want to partner with you and we haven’t stopped talking to people through the last four years that may not have been able to do anything.

But we certainly have continued to try and build relationships and talk to folks and let people understand what we are trying to do and understand what other folks are trying to do. I think there is going to be opportunities out there for us. The when part – unfortunately I don’t think we get to choose that.

I think the folks on the other side choose when and we’ve – because we’ve been unable to play for the last several years, we probably missed being able to participate in a couple of opportunities that may have been good fits for us.

I am hopeful that we are not going to have to sit on the sidelines and miss opportunities as they present themselves in the future. .

Thanks, Dan. .

Thank you. .

The next question comes from Jon Arfstrom with RBC. Please go ahead. .

Good morning, Jon..

Hey, good morning. Just a bigger picture question on the January 1st target for closing.

Can you sequence for us what needs to happen in order for the January 1 date to happen?.

No, I think we need regulatory approval. I think we are down to one hit and so when you look back at what we’ve been through, we certainly have had a laundry list of hurdles that we’ve been jumping over the last several years and the CRA exam completion was a big hurdle for us.

Now the applications are in process and we’ve drawn up a protester which is not unusual and so the regulators are working through their normal process at this point and we remain hopeful that we can get resolution to that before the end of the year. If we doubt, then we will stand back and look at it again and wait another month or two if we need to.

But at this point, I don’t know that there is a whole lot more for us to do besides wait and make sure that the regulators have the information that they need from us and they are telling us they have everything they need from us.

So it’s just a matter of letting the time go for them to have the proper amount of time for them to process and deal with issues the regulators have to deal with..

Okay, good. Buyback thoughts fit deals potentially close to closing.

How do you feel about the buyback?.

Yes, I think that stock buyback when you are ginning up, the earnings numbers that we are ginning up, I think that the stock buybacks continue to be a part of our capital management plan. The current stock buyback expires here at the end of the year. I know our Board will be looking at that as we go forward.

Capital management is important for us and we continue to manage at a higher capital level. So, I think we’ve got opportunities both on the M&A side and on the buyback side. .

Okay.

So no recent deposit for the next few months?.

Yes, I don’t know that there is a general reason to make any change in our process other than we just keep watching what’s happening in the market..

Okay, good. And then just one for Chris. You talked about the slowdown in Houston.

Two sides of the question, can you maybe give us an idea of how material the - call it, the Houston pause was in terms of growth? And then, what kind of lending opportunities are you seeing now? Has it dramatically improved at this point?.

I don’t know that I can provide exact numbers or percentages. That’s hard, but I can tell you that, when there is a hurricane in the Gulf, you have to working in Houston for 35 years with title company shutdown, no real estate transactions happened for a long time. Nobody writes insurance, nobody quote any things.

So there is a good, probably 60 or 90 day lag there. I think we would expect to see some activity as it subsides and the construction picks back up to repair and replace. But it’s still probably too soon to see a lot of that. We are not seeing a whole lot of that. .

Yes, I think there is going to be opportunity for us. Anytime you’ve got a major weather event or any kind of major act something that happens outside that stops business from taking place. It takes a while to measure some of that. That impacts us in lots of ways.

So it not only does our loan team down there, basically go into pause, our mortgage team, now there were mortgage closings that just didn’t happened for three weeks. So you basically lost three weeks out of the quarter where there were no mortgages taken place down there.

You lost three weeks out of the quarter on the insurance side where there was a not a lot of business activity going on. Certainly, the insurance team was very busy working with their claims side.

The claims line was ringing off the phone, but ringing off the wall, but the business side, the business growth side of both the mortgage side, the banking side, the entire process that we got down there took a pause. .

Yes, and like the insurance side, Dan’s point is great. Our guys have to stop what they are doing and take care of customers, that’s when we shine when we are dealing with claims and customers were impacted. And that just slows you down on the revenue, but it pays dividends later and it’s just hard to say when and how much..

Okay, okay, that’s helpful. Thank you..

I appreciate it, Jon..

The next question comes from Matt Olney with Stephens. Please go ahead..

Hey, thanks. Good morning guys. .

Hi, Matt. .

Dan, you mentioned that the C&I growth was impacted this quarter from some lower utilizations in the lines. It looks like historically that the utilization picks up in the fourth quarter.

Just remind us what types of businesses typically drive this? And looking forward to the fourth quarter of this year, would you anticipate some seasonal benefits or other macro factors may be slowed that down as well? Thanks..

I wouldn’t call this as – Matt, this is Chris. I don’t know that I would tie seasonal to it, your latter more macro, it’s what happens in the business cycle. Is there a slowdown? Are they collecting receivables, that’s really hard to predict, but we do see it – it’s just lumpy. .

Yes, when you look at what’s happening out there, we’ve stayed focused day in, day out on taking care of customers and for whatever reason customers who are bringing back into us and line utilization went down which gives us a headwind on loan growth, we had other – the storms we are talking about, when you talk about the storms that hit Texas that’s certainly one, but the other storm that came up in Florida is not technically our footprint.

But those storm warnings came all the way over into our area and certainly did caused things to slowdown and then we’ve had another low grade hurricane that actually came in the Mississippi coast, again didn’t do any real damage, but it all stops business for a week while everybody talks about how to take care of their personal lives.

All of that is a damper on business growth along the whole coast throughout the quarter. .

Understood and thanks for the color. And then on the fee income side, I think you hit on the insurance piece, but on the service charges, it looks like those were up sequentially.

Any change in pricing there? Or anything to speak on the service charge line?.

No, remember, we changed our service charges effective Septembers 1st last year. So, in this quarter, we have finished running through the full year. So we’ve changed our payment order. We’ve changed our process on deposit service charges September 1st a year ago. So we had two quarters to catch up from.

So on a sequential – so comparing last year to this year on the same quarter, we were two quarters of change, one quarter was the same. So, I think over that year’s time we’ve seen volume pick up and now we should have a comparable quarter comparison going forward from here. .

Okay, that’s helpful. Thank you guys. .

[Operator Instructions] The next question comes from John Rodis with FIG Partners. Please go ahead..

Hey, Dan.

How are you doing?.

Good morning, John..

Actually all my questions were asked and answered. So easy one for you. .

Asked and answered. Thank you..

Next question comes from Blair Brantley with Brean Capital. Please go ahead..

Good morning everyone. .

Good morning, Blair. .

Hey, just a quick question on mortgage and a view on kind of margins going forward. I know they kind of trend with the pipeline, but just – I think, in the past, you gave kind of some arrowed views for the year.

Any update there?.

No, I think the numbers are going to be very similar. Again, back to the – we’ve had a recurring theme. It sounds like in the hurricane, when you look at pipelines, the hurricane was damaging to our pipeline. So when you look at what happened down there, we gin up.

I don’t know if it’s 10% of our business on the coast or not, but we could gin up a piece of our business on the coast and because of the storms that slows your pipeline down. So not a lot was going on, on the pipeline side.

But I think when you look at the numbers, 150 Chris?.

153..

153 in the quarter. I think that’s….

Kind of where we take the average to be and….

That’s right..

That’s – a lot of that is an accounting timing entry. So, I mean, what we’ve said in the past is that is the best way to look at that as an average and 150 is kind of where we feel like it’s along, so..

That’s right..

Nothing from a competition standpoint that’s squeezing margins at all?.

No sir..

I don’t think so..

I don’t think so..

All right, great. Thank you..

Thank you, Blair. I appreciate it..

This concludes our question and answer session. I would like to turn the conference back over to Dan Rollins for any closing remarks. .

Thank you for joining us today. If you need any additional information or have further questions please don’t hesitate to reach out to us. Otherwise, we look forward to speaking to you again soon..

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