Good morning, and welcome to the BancorpSouth Q3 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Will Fisackerly, Executive Vice President, 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 risk. Information concerning certain of these factors can be found in BancorpSouth's 2020 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 the reconciliation of these measures in the company's Q3 2021 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 yesterday afternoon. These slides are also in the Presentation section of our Investor Relations website. Now I'll turn to Dan Rollins for his comments on our financial results. Good morning, everyone. Thank you for joining us today to discuss BancorpSouth's Q3 2021 results. I'll begin by making a few remarks regarding the quarter. John Copeland will discuss the financial results, and Chris Bagley will provide more color on credit quality and our other business development efforts. After we conclude our prepared comments, our executive management team will be happy to answer questions. Let's now turn to the slide presentation and spend a few minutes looking at our Q3 results. Slide two contains the legal reminders Will Fisackerly's already discussed. Before I get into the financial results for the quarter, I'd like to provide a brief update on our pending transaction with Cadence Bank, which is highlighted on slide three. As we previously announced, we have received all necessary regulatory approvals, and we look forward to closing the transaction before the end of this week. Both of our teams are very excited about our future together and are actively engaged in finalizing our merger and integration planning. As we have discussed in the past, our new combined leadership team has spent considerable time meeting and visiting with our teammates. Chris and I have enjoyed getting to know many of the Cadence bankers, and I know Paul, Hank, and Valerie have been spending time getting to know the BancorpSouth team. The five of us continue to meet daily to ensure we are aligned in our planning. I am personally extremely proud of the progress we have made since our merger announcement back in April. Hundreds upon hundreds of man-hours have been invested into building the new Cadence Bank. I think we are all confident our teams are ready to execute and deliver the expected benefits of this merger. Slide four provides our highlights for the quarter. While we've known the results reported in the first half of the year weren't sustainable due to elevated PPP income, mortgage volume, and a number of other factors, we continue to be pleased with our core operating performance. Net income available to common shareholders for the Q3 was $70.4 million or $0.65 per diluted share. We had a positive MSR valuation adjustment of $2 million and recorded merger-related expenses of $3.4 million during the quarter. Additionally, we had a $2.4 million charge under the pension accounting rules to record a partial plan settlement resulting from elevated lump sum retirement payments that we incurred thus far in 2021. When adjusting for these items, we reported net operating income excluding MSR of $73.3 million or $0.68 per diluted common share. PPNR, which excludes the MSR adjustment and other non-operating items, totaled $90.1 million or 1.29% of average assets on an annualized basis for the quarter. As we look at our business development efforts, which Chris will discuss more in a moment, we had another great quarter for deposit growth, reporting total deposit and customer repo growth of over $720 million or 12.2% on an annualized basis for the quarter. While we were able to generate a nominal positive spread, the liquidity dynamics in the industry continued to be a drag on margin. From a loan perspective, excluding the PPP forgiveness payments received of approximately $135 million, we reported net organic growth of $122 million or 3.3% for the quarter. This marks the second consecutive quarter of net organic loan growth. As we mentioned last quarter, the decision to sell most of our PPP portfolio has allowed our relationship managers to have a renewed focus on calling efforts and generating new business. Their success is clearly demonstrated in our results as the Q3 is our most successful quarter from a loan growth standpoint since prior to the pandemic. The economies across our footprint continue to rebound and perform quite well. As I said, Chris will provide a little bit more in just a moment. Our fee income businesses also had another great quarter. Our mortgage team produced almost $790 million in loans during the Q3, which is a great quarter by historical standards. On the insurance side, we reported commission revenue of $35.8 million for the quarter, which is an increase of over 9% compared to the Q3 of 2020. Our insurance producers continued to win new business and from the firm premium market that the industry is experiencing. The next item I would like to touch on is credit quality, which continues to be one of the successes that our management team is most proud of. Our charge-off levels continue to remain very low, which is reflected in the fact that we reported net recoveries for the quarter of $2.1 million. This trend, combined with stability and other credit quality metrics, including non-performing and classified asset levels, resulted in a provision release of $7 million for the quarter. While this isn't a sustainable revenue source, it's nice to be able to report such positive credit quality as the economic recovery from the pandemic continues. The last couple of bullets I'd like to touch on relate to capital management and deployment. We are pleased to have been able to take advantage of our share repurchase program to repurchase just over 1.7 million shares of stock during the Q3 at a weighted average price of $28.69. We paused our program at the Q1 of 2020 due to the economic uncertainty associated with the pandemic and had not been able to resume it until the Cadence merger shareholder vote was complete. We still have 4.3 million shares remaining in our current authorization, which expires at the end of the year. We've retained a significant portion of the capital we've generated over the last year and a half, and our capital metrics remain at very strong levels, which is reflected in our total risk-based capital ratio of 14.27% as of September thirtieth. I'll now turn the call to John and allow him to discuss our financial results. John? Thanks, Dan. Slides five through seven show our summary income statement as well as details of our non-interest revenue and expenses. I'll focus my comments this morning on our net interest margin, as well as a few other items that had variances compared to the Q2 of 2021. Before we begin, I would remind you that the two transactions that closed May 1st will impact the comparability of the information shown on these three slides. This is the first full quarter of financial impact for the May acquisitions. You'll notice on slide five that we reported a $1.3 million or 0.8% increase in net interest revenue compared to the Q1. While we have been able to earn a small spread and protect net interest income dollars, the liquidity debt dynamics that Dan mentioned continue to pressure our margin. Our net interest margin, excluding accretion, was 2.81% for the Q3 compared to 2.94% for the Q2 of 2021. The individual yield and rate components continue to remain fairly stable as the margin trends are almost exclusively a function of mix shift resulting from the elevated deposit growth. Our securities yields were very stable compared to the Q2, while our loan yields, excluding accretion and PPP, and our total cost of deposits both declined three basis points respectively. We expect our funding costs to continue to decline as the total cost of time deposits remains considerably higher than our current new and renewed rates. Additionally, we will continue to work through the repricing of higher cost public fund deposits upon renewal. Slide six shows the breakout of our non-interest revenue components. There's really very little to cover here that's incremental to the comments Dan has already made regarding mortgage and insurance. We did see a nice increase of over 16% in our deposit service charge revenue for the quarter compared to the Q2. Slide seven provides the details around our non-interest expense. Dan mentioned the two items that we classify as non-operating, merger expense of $3.4 million, as well as the pension settlement charge of $2.4 million. Similar to the Q4 of 2020, this charge was a result of elevated lump sum retirement payments exceeding the threshold for partial plan settlement. Beyond these items, I believe salaries and benefits, which increased $4.8 million quarter-over-quarter, is the only other significant item that warrants additional color. There are several factors contributing to this increase. The additional month's worth of activity associated with the two mergers was one contributing factor. Beyond that, the primary driver was our annual compensation adjustments, which were effective on July 1st. Finally, we continue to see significant wage pressure across the board, both geographically and across all job functions. That concludes my comments on the financials. Chris will now provide some color on our business development activities. Chris? Thank you, John. Good morning, everyone. Slide eight of the presentation reflects our funding mix and deposit trends for the quarter. We reported total organic deposit growth of $722 million or just over 12% annualized. Clearly, the bank and the industry as a whole continues to experience unprecedented liquidity. Our focus remains on protecting relationships and managing deposit costs down. As John mentioned, there is still opportunity to continue that trend. An example, our total time deposit cost for the quarter was just over 90 basis points, while our new and renewed rates today are well below that mark. As I've mentioned before, we also have an opportunity to drive public fund costs down further, but that will be somewhat lumpy as they mature and reprice at various times. Moving to slide nine, you will see similar trend data for our loan portfolio. We received PPP forgiveness for payments in the quarter of $135 million. When you adjust for this, net organic loan growth for the quarter was just over $121 million or 3.3% on an annualized basis. As Dan mentioned, this is the second consecutive quarter of net organic loan growth that we've experienced. After the PPP adjustment, we saw meaningful growth in our C&I non-real estate, commercial real estate, and consumer mortgage portfolios. From a geographical perspective, most of the growth opportunity during the quarter was in our Texas and Tennessee markets. Additionally, our corporate C&I syndications team had a great quarter from a loan growth perspective. Moving to slide 10, credit quality continues to be a good story for us. We reported net recoveries for the second consecutive quarter. Net recoveries of $2.1 million, combined with declines in our classified asset levels, contributed to a provision release of $7 million for the quarter. Our reserve coverage ended the quarter at 1.74%, excluding PPP loans. Finally, as shown on slide 11, we continue to monitor the lingering impact of credit decisions we made to assist customers during the early part of the pandemic. The loan totals that are either in deferral or that have been temporarily converted to interest only continue to decline quarter after quarter. As of September 30th, we had $26 million in deferral and $91 million in interest only, and all are scheduled to return to regular payment schedules over the next few months. In our view, this is really a non-story at this point in the cycle. Unless there is a change in the economic trends, we expect this to be the last quarter that we will provide this particular disclosure. Slide 12 provides a five-quarter look at our results for insurance and mortgage products. Mortgage reported origination volume of $790 million for the quarter, 65% which was purchase money. While the slight decline in the pipeline resulted in margins being a little below what we would call a more normal or average level, these results are strong by historical seasonal standards. Refinance activity has slowed as expected, but the housing market remains strong across our footprint. The anecdotal examples around multiple quick offers above asking price on new listings have extended into our smaller markets as well. Historically, that type of demand has been seen primarily in our more urban geographies. Moving to insurance, total commission revenue for the quarter was $35.8 million, which marks the second consecutive quarter that we've reported near double-digit revenue growth on a percentage basis when compared to the comparable quarter for the prior year. A very high customer retention rate, new business success, and continued firm rate market have combined to result in a very nice revenue growth for the insurance team. Now I'll turn it back over to Dan for his concluding remarks. Thanks, Chris. It's a really exciting time for us, and it's taken everyone working together to make the results that we've reported possible. The effort of our relationship managers are evident in the results reflected on both sides of the balance sheet. All of our fee lines of business, mortgage, insurance, and wealth management, are performing very well and making meaningful contributions to our performance. Perhaps most importantly, our credit quality metrics are very strong by any standard. This is a direct testament not only to the efforts of our relationship managers but also the quality of our underwriting and risk management processes. Finally, the optimism around our company is at an all-time high as we expect to close our merger with Cadence later this week to create the new Cadence Bank. The operational support teams for both our bank and Cadence have been working around the clock to prepare for the upcoming legal closing and to begin executing on our integration processes. In fact, here with us today is Paul Murphy, Valerie Toalson, and Hank Holmes. Operator, our team is now ready to answer any questions. We will now begin the Q&A session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Brett Rabatin of Hovde Group. You may go ahead. Hey, good morning, everyone. Hey, Brett, good to hear from you. Wanted to first ask, you know, when I look at the organic growth, you know, for BancorpSouth, $122 million and $76 million for Cadence in the quarter, you know, obviously one of the big things with this deal is that Cadence brings to BancorpSouth a much stronger commercial effort and gets you guys, you know, years ahead of where you would have been. Can you maybe give us an update on how you think about the pipeline from here and maybe growth expectations and how you do that? Sure. I'll take a stab, and we've got plenty of people here that can help on that. I think that when you're looking at the $122 million for us, that was heavily weighted into the C&I side. You don't see it because the $135 million that went away from PPP came out of the C&I side. C&I continues to perform well. We saw an increase in CRE. Our pipelines are really looking good. Chris, you wanna tag in on the pipeline, and then Hank can talk about what's happening at Cadence. Yeah, I'd just add that Dan mentioned it, that our organic growth net of PPP was more heavily weighted towards C&I, about 60% of that growth, and our pipelines look good. I think we're seeing quite a few opportunities all across the geographies and all the different business lines. Hank, what are you guys seeing? Yeah, thanks, Chris and Brett, appreciate the question, and I'm excited about being on the call with our BancorpSouth friends. I would add to that, we're seeing nice volumes in our loan committee that we haven't seen in quite some time. I'd also like to report that it's really across the board. There's no real geographic concentration or specialized concentration. The timing that it takes to close on C&I transactions is a little longer, so we're optimistic about seeing that growth through the end of the year and into next year. We also have a strong CRE portfolio that performed quite well during COVID and is trending in the same direction this year. In fact, they're gonna do better this year than they did last time. Given their construction loans, we'll see some nice volumes and advances out of that CRE as well. Overall, from a pipeline perspective, and as we review those, they are steady. I would echo Chris's comments, and we're getting a lot of good looks. The only headwind there is we are seeing some pricing pressure, but optimistic about the growth going forward. Now when you look at our earnings announcement, our being the BXS side, I guess there's two earnings announcements to look at. When you look at the BXS earnings announcement, you know, we break out by state, and you can see Texas had the best growth we've had in many, many quarters. We grew a little over 15% in Texas in the quarter. You know, while we're brand new in Georgia in the last two quarters, our Georgia-Tennessee footprint also had a little less than 10% growth. When you look at going forward and the pickup of the Atlanta market, the Tampa and Orlando markets in Florida, I think we feel pretty good about what's happening. Texas has been positive for us and the Cadence team for a long time. I think, you know, looking forward, we feel pretty good, Brett. Dan, would you care to take a stab at, you know, thinking about an outlook for loan growth on a% basis, or is it just too early to take a stab at that? Yeah, I think it's too early to talk about a percent, I think. I think that as we've been around, you heard me say a few minutes ago, we've all been making the rounds. We've been all over our footprint talking to the relationship managers that are out there, and there's a lot of excitement around opportunities for us to do more for our customers than we've done in the past. I think the footprint's open. When you're looking at our footprint from an economic standpoint, the markets are performing well. We're open. Business is being transacted. I think there's opportunity for us. Okay. Appreciate the color there. The other question I had was just around the liquidity. Looks like you guys bought about $1 billion in securities this quarter, and obviously, Cadence has an even more liquid balance sheet than you guys do. Can you talk maybe about purchases from here, what you bought in the quarter, and what you might do with the liquidity from the Cadence side of the equation? Liquidity. Liquidity is not our problem right now. We have plenty of that. Valerie, you wanna jump in on that side? Yeah, sure, thanks. Yeah, obviously, you know, both banks have had significant liquidity. The BancorpSouth group has been more active in buying securities than we have. I think that you'll see as one of the things that we've been doing is eager to get our banks merged. Post-merger, be able to do a number of things from the balance sheet that we've been holding off on doing so far. We've got both balance sheets put together in our outcome modeling, and we're looking at the different scenarios as we go forward. Obviously, with our strong capital, with our strong liquidity, we're well-positioned to be able to put some of that liquidity to work in a variety of different ways. John, the specific was what are we buying? Yeah. We're buying variable rate mortgage backs, and that's one of the reasons you see the big unrealized loss in the AOCI change from quarter- to- quarter. That's mostly what we're buying right now. Does that help you, Brett? That's helpful. Thank you so much. All right. Appreciate your time. Our next question comes from Michael Rose from Raymond James. You may go ahead. Hey, everyone. Thanks for taking my questions. I just wanted to start on slide three. When I look at the metrics, they're all the same except for the asset size of $48 billion relative to the original slide deck. I'm just wondering, with the environment having improved and some pretty good, you know, growth out of both sides, you know, why wouldn't those numbers be higher? Are they just not updated? Would just love some updates on kind of what the maybe some of the closing merger assumptions could be versus where they were back in April. Thanks. Yeah. The team's working really hard to be ready for the closing that's coming up in a few days. The only number that was updated on this slide, when you read the footnotes, was the asset side. When you're looking at the other boxes, that's still looking at announcement numbers. We haven't put out any new numbers on what we look like on a combined basis. The mark-to-market accounting team is working hard. The accounting team is working hard. There's a lot of activity going on behind that. Valerie, I'm gonna let you jump in here again. Yep. No, you're exactly right. Those are all numbers that we'll be updating as of the close. While there's a lot of work going on to prepare for that and a lot of analysis and a lot of trends and so forth, not quite ready for primetime. Is it, well, is it fair to characterize it, though, as, you know, the environment has improved and, you know, that those numbers could ultimately prove to be conservative? Is that the way we should all be thinking about it? I think some things have certainly improved. The interest rate environment and the margin environment hasn't improved for us. You know, I think when you're looking at what we've got from the opportunity to grow, like going back to April, I think there was a lot more fear in the market on the look-forward economic activity in April. We've talked about the mark coming down. We knew we were taking a pretty hard mark in April. As you look back, the markets have all improved since then. Both of us had reserve releases in the last quarter. From an economy standpoint and a credit quality standpoint, we know we've got an improving situation. From where we're going with the deposits that are flowing in and the liquidity, we can't seem to turn them off. You know, both of us had tremendous deposit growth in the quarter, and so that continues to damage our net interest margins. Understood. That's all I had. Thanks for taking my questions. Thanks, Michael. I appreciate your time. Our next question comes from Jennifer Demba from Truist Securities. You may now go ahead. Thanks. Good morning. Hey, Jenny. Dan, just wondering what your share repurchase appetite looks like over the near term. You've got, like, over 4 million shares left on the authorization. I think that we have excess cash. So I think we wanna be opportunistic, as we've done in the past. I think we'll be looking for the opportunities to deploy that capital. Should the opportunity arise this quarter, I would expect that we would be back in that market. Anybody want to add on to that in here, Paul or Valerie? I No, absolutely. In addition to what you saw BancorpSouth acquire during the Q3, Cadence also acquired 2.4 million shares. We've both been active in the markets when the markets are right for us. Combined, it was right at $100 million in total repurchases in the quarter. Exactly. Meaningful. Dan, can you also talk about your technology investment priorities over the near term and where you really wanna place emphasis over the next 12 months or so? Yeah. The tech teams have really been working hard to try and make sure that we understand where we are. The process we've gone through was to identify current state. What are we both doing today? What processes are we driving today? What technology are we driving? What's customer facing? And then also what's inside the bank for our teammates to be driving off of. Then we've identified what we want to be in a future state. Now we've got to build our roadmap to get us from current state to future state. That process is starting, you know, now. By the end of the week, that process will begin executing on those plans. You know, we'll spend a big part of 2022 consolidating the two teams together, but that'll be coming in stages and in steps. We think that our mortgage teams will be all on one platform before the end of this year. We think that we have a couple of other groups that will be converting over or operating all on one platform in Q1 and Q2 next year. The final phase of the big computer conversion will be later in 2022. When you're looking at future investments, clearly it's what's the consumer doing and what's the commercial customer doing. When we're looking at our treasury management products and the app features around treasury management, that's a key product that's out there for us. When you're looking at the consumer side, making sure that we've got the consumer app in place. Both of us have been in the process of deploying ITMs or interactive teller machines, video teller machines. That's working well for us and helps us reduce costs in the branches. There's a lot of activity going on on that front. I don't know that I have any one specific item that I would call out. Paul, you're close to that. Well, I mean, it was a good summary. Jennifer, I know we've talked about some of these things on prior calls, but we are pleased that, you know, the more we look at the combined organizations, it's really, you know, it's a slogan, but it's really true. We are better together. We look at, for example, our digital initiative, which is substantial and has, you know, some traction. BancorpSouth has a similar initiative. They're focusing on some things that we weren't. You look at robotic process automation initiative that they have, we have. You know, we're just gonna go further, faster together because we're gonna have more resources. We will be able to do some early conversion of the mortgage business, for example. That'll be, you know, probably Q4. As Dan mentioned, you know, the longer-term process for the conversion next fall, the big conversion is on track. It is one of the more exciting things about putting two companies together is how you can do more things faster and some of the things that, you know, were clearly the right steps for us. You can get to it much quicker when you have more resources. Thank you. Hey, thank you, Jenny. Good to hear from you. We hope the Astros do really well, this week. Our next question comes from Kevin Fitzsimmons from D.A. Davidson. You may now go ahead. Hey, good morning, everyone. Morning, Kevin. Just a question on expenses. I know pulling the non-operating items out, which I did, we still saw expense pick up linked quarter. I know there was reference to, I believe, personnel expenses being up partly due to the teams working on, you know, the merger activity. I'm just trying to drill down into, is any of that expense load in Q3, was it, you know, would you call it, you know, maybe you didn't identify it as non-core, but would you call it non-run rate or pulling forward, you know, some of the expenses related to the deal or on a combined basis that might make that expense base a little inflated versus what we should model in going forward? There may be a little of that. When you look at the salary benefit costs specifically, remember we only had two months of the last acquisitions in the last quarter. We had a full three months of those two acquisitions in the Q3. There's part of your increase. John mentioned our annual salary process and review is a July 1st effective time. That's another piece of that puzzle that's got an impact on it. Then, you know, we continue to experience wage inflation. The folks that wanna talk about transitory inflation, I don't have an opinion on that right now, but I can tell you from a wage pressure there is wage pressure out there today. We're seeing that, and we're feeling that. I think that your question specifically is around, did we have some wage cost in there that may not be future run rate? My answer is probably a little bit, but I don't know that I would be able to identify that in a number. We continue to watch expenses closely, and I do think we have the ability to continue to drive expenses down as a standalone entity. Obviously, when you put us together, it's a little different. We should be able to start seeing some benefit of some of that. You know, we'll see some cost saves coming out of the gate on things that we can turn on immediately. But you know, it'll take a while to turn the rest of them on. Valerie, you want to tag on? Yeah, I think you said it well. You know, as we look at our expense savings, you know, it's things that we're starting to layer in into 2022 planning. Obviously, as we announced, at the acquisition date, you know, most of that or the full impact of that'll be 2023. We are absolutely working to get as much of that in as soon as we can. John, would you identify anything specific that was in Q3 that's not run rate? No. No, I think it's pretty much all run rate. Yeah, as Valerie mentioned, we're in the budget process for 2022. That's really the first big step in identifying cost saves that'll be achieved later on down the road. That help you, Kevin? Okay. Yeah. No, I appreciate that. That's very helpful. Just one other quick one for me. Earlier, I believe Valerie had mentioned that there were some balance sheet moves that you all were, you know, so you want to get past closing, obviously, and so you were holding back doing. Can you give just some, you know, examples of what kind of things those are that you're, you could do, but you're holding back doing until you get past the close? Thanks. Holding liquidity would be one, so we don't end up in a mark-to-market. Go ahead, Valerie. Yeah. Well, no, that's exactly right. One of the things we wanted to do was do the modeling, get our balance sheets combined on our asset liability modeling, which we have together now, to evaluate our portfolios together, to evaluate our overall balance sheet asset sensitivity together, and best strategize on how to deploy some of this liquidity. As you know, there's value obviously in going into security split, but doing it the right way is something that we pay a lot of attention to, because of the impact of where we are on the rate curves and the impact to those portfolios when the rate curves start to increase. We're spending a lot of strategic time on that, and you'll start to see us talk about that a little bit more as we're combining companies in the very near term. Okay. Thanks very much. Thanks, Kevin. I appreciate your time. Our next question comes from Catherine Mealor from KBW. You may now go ahead. Thanks. Good morning. Hey, Catherine. I just wanted to follow up on Michael Rose's question, just on, you know, looking at the slide three and the pro forma EPS accretion and tangible book value accretion also that we're going to see from the deal. Totally appreciate that that's not updated, but I guess, is there anything to be aware of that would be a negative to either better EPS accretion or tangible book value accretion with this deal? Because I think the way I would think about it is credit's a lot better, so the mark should be lower. Also the balance sheets are bigger. The liquidity is of course impacting the margin, but still the balance sheets are bigger because of all the liquidity. you know, that coming together, I would imagine, should bring EPS accretion, better as well. Just kind of any headwinds that we should be aware of that wouldn't allow us to think that EPS accretion should actually look a lot better today than maybe it was when the deal was announced. I think that assumption is right. A bigger balance sheet and better credit quality. I think we have agreed all along that if credit marks move down, that's a net positive to tangible book value. Obviously we're seeing that happen. We don't know the numbers at this point, but it'll be different than what we had announced back in April. Again, to me, the biggest negative is as we continue to bring deposits in, and we're making very few basis points on the deposits that we're bringing in. We've got to be able to deploy that. You're back to the opportunity to grow loans. If the economy continues to improve in the footprint that we're sitting in, I think we feel pretty good about the opportunities in front of us. Valerie? No, I think you said it well. I think, Catherine, that you know nailed it in the fact that there are a lot of positives. The fact that we are bigger, balance sheet is better, but it's all about deploying that excess liquidity. That'll be something obviously that we'll be looking to do. The two biggest markets that we're in, or I should say the markets that have the biggest presence for us from a loan perspective is Atlanta and Houston. I thought you were going to talk about the Braves and the Astros for us. Both of those markets look pretty strong from a growth perspective. I'll just chime in here. You know, when I think about historical Cadence operating results, you know, a PPNR attractive, you know, top quartile, maybe a little better efficiency ratio. I mean, last quarter, 56%. But we are an efficient model and attractive earnings organization, and it's gonna, you know, merge in well and nicely with BXS. Great. Yeah, no, I'm not going to be wishing you well tonight, Dan. Go Braves tonight. My other question maybe just on the expense side. Totally understand this is probably a good full quarter to look at. Maybe as we think about the timing of cost savings, I think last you said the conversion was slated for late 2022. Could you give us any kind of thoughts on what level of cost savings we could see up front before we get to conversion? The timing when we'll kind of see a full quarter run rate of pro forma cost savings fully in the numbers. Yeah. I think you see a full run rate in 1Q 2023. You know, I think you've got a long way to go to see a full run rate. I think you'll see cost saves stepping in, coming out of the gate. You know, there are certainly things that we will be able to turn off on Friday that will be less expense than what we're combined spending today. I don't know that we have a run rate analysis that would tell you what we're going to see in Q4, Q1, Q2, Q3 next year. I think it will continue to ramp up as we do exactly what Paul was talking about a minute ago, where we you know start moving some things together. Every time we can consolidate or combine, or convert whatever language you want to use, the different parts of the bank that we're putting together, all of that turns into cost savings for us. Great. Very helpful. Thanks. Debra Ace. See y'all later. Thanks, Catherine. Our next question comes from Jon Arfstrom of RBC Capital Markets. You may now go ahead. Thanks. Good morning, everyone. Jon. Couple questions here, but most of it's been handled. In terms of lending at both companies, safe to say that the growth that you're seeing is a trend and pipelines are improving. Is that a fair characterization? I'll let Hank and Chris jump in here on that one. Yes, very fair. Affirmative. I agree with that as well. Okay. You want more quotes? I like that kind of an answer. Also, just a question on lending appetite once the merger is done. Any changes to the approach as credit and risk come together for the two companies? No, Jon, I think, well, changes in that we're better together, as Paul said earlier. In much, almost everywhere we look, including credit and opportunities, we're just very synergistic. You know, they've got some expertise in business lines that we don't have, and we have some that they don't have. They fit together very well. That gives us more opportunity to grow revenue in different channels at different times. When we put the two balance sheets together from a loan perspective, you know, I think we impact the concentration levels that both banks were dealing with in certain segments. In a positive way. In a positive way. Before they, we de-risk from that concentration perspective. That's a plus. That gives you more fuel in each one of those lines to kind of drive some additional business opportunities. We're bigger, so you would expect that you would be able to even take care of some of your existing customers in a larger fashion. I think those are all positives. We've spent a lot of time together from a credit perspective, putting our loan policies together. I can tell you from the BXS side, we're very excited. We have strong confidence in the credit side of the Cadence side of the house. It's been a very, very productive and positive journey putting the loan policies together. We feel good about where our underwriting parameters and views on the types of credits we want to do going forward. I think it's just very positive. Hank, you want to add anything? Well, the only thing I would add to that is that I think Chris said it well, you know, the BancorpSouth team was doing what was getting going and doing what we like to do on the C&I side. I think this is an acceleration of that, and building on that team brings us together. I also believe that on our community bank, there's some opportunity there to do a little more than we have done historically at Cadence Bank, and I know our teams are excited about that as well. I think Chris said it well, and a few things I would add. Yeah, we're just a few days away, Jon, from the we and the they turning into the we. Yep. Jon, one of the good things, I know you know us both well, but one of the good things about our situation, just a reminder, is that there's very little market overlap. Really all of our bankers are going to. Let's go back and call. We've got a bigger balance sheet. We have our first joint board committee meeting coming up this week, and so we'll be making final decisions on what exactly hold limits we're going to have. We're just going to inch up a little bit. We're really not going to make a big move on increasing hold limits, but we will be able to lead some bigger transactions, so that will help. Again, the market opportunity, you know, for us to really just double down on the calling effort, is right before us. Mm-hmm. Okay. You all may have just answered this, but, you know, anything else, Dan, you'd want to call out on revenue synergies that maybe you've discovered since the April announcement as you get familiar with each other? I don't know that there's anything new that we would call out, but the same excitement that we've been talking about all along is there. Our insurance team is just chomping at the bit to get out. You know, insurance revenues are growing today. We know we've already won some new business in this quarter. We think that the ability to partner up with the Cadence bankers and the soon to be Cadence insurance team is exciting. The mortgage team, as we've talked about before, Cadence doesn't have a big mortgage presence in the Georgia or Florida footprint, and we're actively recruiting in those markets. There's clearly opportunities. We just need to execute and keep moving forward. Okay, good luck with everything. Thanks for. Thanks. Thanks for the help. Yep. Bye. Again, if you have a question, please press star then one. Our next question comes from Matt Olney from Stephens. You may now go ahead. Thanks. Good morning. I wanted to go back to operating expenses and I guess ask Valerie on the Cadence side kind of the same question about the Q3 expenses. Anything unusual? I think you call out the merger expenses and then another settlement that gets us to a core run rate around $103 million in the Q3. Anything else you'd call out that's unusual that wouldn't be in the run rate from here? Yeah. Thanks, Matt. The only other factor that I would say is a little bit unusual is a little bit higher incentive accruals. As we look through the year and obviously the excellent credit results that we've had throughout this year impacts the overall incentive accrual. We factor that in, and that definitely plays into what you see really as part of some of the increase there in the salaries and employee benefits line. Other than that, it's really captured for the most part in the merger expenses and then obviously the regulatory fees as well. Got it. Okay. That's helpful, Valerie. I guess, changing topics. I wanna ask more about interest rate sensitivity of the combined bank. It seems like there's some nice upside to higher rates for each bank by itself. Can you speak to the bank sensitivity to higher rates and then maybe thoughts on the combined company? Thanks. Can you tell us when rates are gonna be higher first? I'm gonna guess a year from now, Dan, but my guess isn't worth a whole lot. Oh. Okay. Yeah, that's all helpful. I do think we're excited about the sensitivity. Valerie, you've got the specific numbers. We've been modeling the combined entity for some time. Go ahead, Valerie. Yeah, sure. When you take the two banks combined, it actually increases BancorpSouth asset sensitivity. It decreases Cadence Bank sensitivity, probably about half. We'll be a little positive over neutral. That being said, that is with the existing balance sheet. As we leverage some of the additional liquidity into loans, the largest portion that both banks are seeing in our loan growth is in C&I lending. That will continue to push the asset sensitivity higher. On the Cadence side, we've got about two-thirds of our loan growth that's coming in today is actually C&I driven. All of that will certainly help as we start to increase rates. Both banks do have a number of loans on their floors, and so the very first rate movement or so will be muted by that. Once you get along past the first one, you'll start to see more and more positive impact from that. We also believe that where our deposits are positioned, we both have significant non-interest-bearing deposit levels, and where our CDs have repriced, that we'll also be able to appropriately lag the rising deposit costs along with the industry. That will certainly help see that benefit, when and if we start to see some of those rate increases. I think on the BancorpSouth side of the aisle, Matt, we've still got downward movement in deposit costs. Cadence has got really good deposit costs and have not seen the big drops that we've seen. But we still have the ability to walk down our deposit costs, and we're still running on the same 3 or 4 or 5 basis points a quarter for some time. Yep. Okay. Dan, that last point as far as downward pressure on deposit cost, I think you also mentioned some pressure on overall core loan yields. Do you think that you can manage deposit costs lower in line with those lower loan yields? Do you think it could be the opposite? I don't know that I have an answer for that with any conviction. I think, you know, clearly loans are competitive and the market is very competitive out there today. Everybody wants to be growing loans. There are some folks that will price to buy credits. There are some folks that may be stretching more on terms. I don't know that we're losing a term at all, but we're certainly trying to make sure that we're protecting good customers. Sometimes when you're protecting good customers, that means you're giving up on some price. I think that's a hard question today. What the deposit costs will do is just benefit us in some way. I would hope that we could keep up, as you just mentioned, but I don't know that we have any modeling that would tell us whether we can or cannot. I think that as you take a look at the pace of the deposit cost, it'll be a little bit more gradual. On the loan yield, it's going to depend on the volume. If we get back to some, you know, pretty meaningful net origination volumes, those lower yields are going to have an impact on those loan yields. That being said, it's going to be significantly better than the yield of cash for investment. Also on BancorpSouth side of the aisle, what we're putting on the balance sheet drives that quarterly loan yield. While we've been growing big in the C&I side, if there's opportunity to grow on the community bank side that Hank was talking about, on the real estate side, that will move that yield up a little bit, but you just don't know where you're going to get growth from quarter- to- quarter. Yeah, understood. Okay. That's all for me, guys. Thank you. Hey, thanks, Matt. I appreciate all your time. This concludes our Q&A session. I would like to turn the conference back over to Dan Rollins for any closing remarks. All right. Thank you all for participating today. As you can hear, I think you can hear clearly that we're really excited about what the future looks like for us as a combined company. We're excited to start the new Cadence in place on Friday. Thank you all very much for your time today. I look forward to catching up with you again soon. The Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.