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BancorpSouth Bank (BXS) Q1 2021 Earnings Call Transcript

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BXS earnings call for the period ending March 31, 2021.

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BancorpSouth Bank (BXS -0.80%)
Q1 2021 Earnings Call
Apr 22, 2021, 11:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good day, and welcome to the BancorpSouth First Quarter 2021 Earnings Conference Call and Webcast. [Operator Instructions]

I would now like to turn the conference over to Will Fisackerly. Please go ahead, sir.

Will Fisackerly -- Senior Vice President And Director of Corporate Finance

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 containing 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 first quarter 2021 earnings release. Our speakers will be referring to prepared slides during the discussion. You can find the slides by going to 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 Presentations section of our Investor Relations website.

And now I'll turn to Dan Rollins for his comments on our financial results.

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Thank you, Will. Good morning. Thank you for joining us today to discuss BancorpSouth's first quarter 2021 results. I'll begin by making a few remarks regarding the quarter. John will discuss the financial results in a little more detail. Chris will provide some color on credit quality and our business development activities. After we conclude our prepared comments, our executive management team is happy to answer questions It is an exciting time to be a part of the BancorpSouth team. The economies in our footprint are open and performing well. While the virus rates in our footprint have improved considerably, we continue to exercise caution as it relates to our internal COVID protocols as the vaccine distribution continues and the public vaccination rate continues to rise. We have started transitioning teammates back to the office with the goal of returning everyone by June One. We will obviously continue to monitor the situation closely and adjust as needed. Let's now turn to the slide presentation and spend a few minutes looking at our first quarter results. Slide two contains the legal reminders Will has already discussed. The most exciting news relates to our continued efforts to grow our company. We recently received regulatory approval to close our pending mergers with National United Bank and FNB Bank. We look forward to closing these transactions May one and officially welcoming these two teams into our family. Last week's news regarding our merger with Cadence Bank has obviously created a lot of buzz around our company. I've been able to travel to various parts of our footprint over the past 1.5 weeks and visit with our team. There is a strong sense of optimism around this transaction and the opportunity that it creates for our shareholders, our teammates and the customers and communities we serve. There's still some summary information on Slide three of today's presentation.

We also published an investor deck and held a separate call last week regarding this transaction, if you would like additional information. Slide four provides our highlights for the quarter. We reported a record quarter from an earnings standpoint, both from a GAAP and an operating perspective. Net income available to common shareholders for the first quarter was $79.2 million or $0.77 per diluted share. We had a positive MSR valuation adjustment of $7.4 million, and we recorded merger-related expenses of $1.6 million during the quarter. When adjusting for these items, we reported net operating income, excluding MSR, of $74.8 million or $0.73 per diluted common share. This represents an increase compared to $0.69 per diluted share in the fourth quarter of 2020 and $0.33 per diluted share in the first quarter of 2020.We had another great quarter from a pre-tax pre-provision net revenue perspective, reporting PPNR of $99.1 million for the quarter, which represents an increase of approximately 6% compared to the fourth quarter of last year and an increase of 8% compared to the first quarter of last year. By definition, we exclude the MSR adjustment and other nonoperating items from our PPNR calculation. Credit quality continues to be a positive story. While Chris will provide some additional details, let me just say our credit quality indicators have continued to improve as well as the economic forecast utilized in our CECL process.

We did not record a provision for the quarter, and total NPAs declined by almost $22 million or 16.5% compared to the fourth quarter of 2020. From a business development standpoint, we continue to see trends that are consistent with many of our industry peers. Liquidity levels continue to rise, which is reflected in total deposit and customer repo growth of $1.3 billion or almost 27% on an annualized basis. Loan demand, excluding PPP, continues to remain slow. We originated and funded $464 million in PPP loans during the quarter while we received forgiveness payments of $308 million. Finally, our mortgage team had another great quarter with $790 million in production, which contributed $17.9 million in production and servicing revenue. Recent moves in rates have certainly impacted the refi market as we look forward.

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

John G. Copeland -- Senior Executive Vice President, Treasurer And Chief Financial Officer.

Thanks, Dan. Slides five through seven show our summary income statement as well as details of our noninterest revenue and expenses. Dan has already mentioned the trends in our EPS and PPNR numbers. I have a few brief comments around the dynamics in our net interest margin as well as a few other items that had variances compared to the fourth quarter of 2020. You'll notice on Slide five that net interest revenue declined by approximately $4 million compared to the fourth quarter of 2020. Approximately $2.5 million of this decline is a seasonal factor associated with the short day count in the first quarter of each year. Beyond that, as Dan mentioned earlier, the balance sheet dynamics for BancorpSouth and the industry continue to put pressure on the margin and net interest income. We reported a net interest margin, excluding accretion, of 3.08% for the quarter compared to 3.24% for the fourth quarter of 2020. This compression continues to be driven primarily by balance sheet mix. Deposit growth of over $1 billion, combined with pressure on loan balances outside of PPP, really weighs on the margin. But when you look at the individual yield and cost components of the margin, we continue to be pleased.

Our loan yields, excluding PPP and accretion, declined by only four basis points from 4.53% for the fourth quarter to 4.49%. We also saw a comparable decline in our cost of deposits from 38 basis points for the fourth quarter to 33 basis points. We are optimistic that we can continue to drive deposit costs down, particularly in the time deposit and public fund categories. Regarding PPP, net interest income for the quarter included approximately $3.1 million of accelerated income recognition associated with PPP loans that were forgiven or paid off during the quarter. As of March 31, we had approximately $22 million in remaining unamortized net fees on PPP loans. This number includes the most recent round of funding. Slide six shows the breakout of our noninterest revenue components. There really aren't any material variances in the first quarter results. While refinance activity is declining, our mortgage production volume and revenue continues to remain higher than what we would consider to be a more normal mortgage environment. Wealth management revenue for the quarter did benefit from one unusually large fee totaling approximately $800,000. Finally, the variance in other noninterest revenue was driven by $2.7 million in historic tax credit amortization that was recorded in the fourth quarter, reducing other noninterest revenue.

We discussed this item during our fourth quarter earnings call. Slide seven provides the details around our noninterest expense. I will point out one item related to our first quarter salaries and benefits expense. We had an accrual true-up of approximately $3 million related to our equity incentive plans that reduced salaries and compensation expense for the first quarter. Most of the other variances noted here are driven by onetime items in the fourth quarter results. The footnotes on this slide contain a reminder of some of those items. I would just mention that while revenue headwinds do make it difficult to see meaningful improvement in the efficiency ratio, we are pleased with our ability to continue to hold expenses in a tight range. Total operating expenses at $154 million represents the lowest quarterly level that we have reported in quite some time.

That concludes my comments on the financials. Chris will now provide some color on our business development activities.

Chris A. Bagley -- President And Chief Operating Officer

Thank you, John. Starting with Slide 8, you'll see our funding mix We reported $1.3 billion in deposit and customer repo growth for the quarter or 26.7% on an annualized basis. Our total cost of deposits declined five basis points to 33 basis points. We do believe there is still room to continue to drive our overall funding cost down as time deposits and public fund bids continue to reprice.

Moving to Slide nine, you will see similar data for our loan portfolio. The story continues to be one of PPP, and total loans were essentially flat quarter-over-quarter. When you exclude PPP loans, declined approximately $140 million in the quarter. While we are seeing opportunities, these are being somewhat offset by some aggressive pricing as well as larger loans refinancing and/or moving to the nonrecourse market. On the CRE side of things, opportunities have presented themselves in the multifamily space and owner-occupied transactions, albeit at very competitive rates. And we are experiencing good pipelines in the general C&I book. Slide 10 contains some updated stats on our PPP efforts. Through the end of the quarter, we have processed applications for forgiveness on just shy of $700 million in loans and have received funds on $570 million.

We have funded just over $460 million during 2021 at an average loan size of $62,500. Moving to Slide 11. Net charge-offs were nine basis points annualized. Total nonperforming assets declined by 17%, and we saw declines in criticized assets as well. These metrics, along with improvement in the economic forecast in our CECL process, resulted in no provision being necessary for the quarter. Our allowance coverage remained stable at 1.74% of net loans and leases, excluding PPP loans. We continue to actively monitor the segments of the loan portfolio that have been identified as higher risk as a result of the pandemic, which is shown on Slide 12. As we've said in the past, for us, this is primarily in the hospitality book. We continue to stay close to our customers, and current trends are encouraging. Interest-only and deferral outstanding balances are relatively stable compared to year-end. Of note is 80% of the portfolio is on regularly scheduled payments, and the majority of the loans converted to interest-only will be rolling off in the next two quarters. Slide 13 provides a 5-quarter look at our results for insurance and mortgage products.

Mortgage reported origination volume of $790 million for the quarter, 48% of which was purchase money. Volume continues to remain elevated relative to historical levels as the purchase money market remains strong across our footprint as evidenced by our pipeline of just over $600 million at March 31. Moving to insurance. Total commission revenue for the quarter was $30.7 million, which represents an increase of about 4% over the first quarter of last year. While we are seeing firming of premium pricing in some segments, we are also seeing some mitigation of the increased opportunity, offset by clients altering coverage risk to manage overall cost. All in, we continue to have good retention numbers at above 90%, and we are experiencing some increasing pricing opportunities. Finally, I would like to give kudos to our wealth management team. As we mentioned last quarter, we have surpassed $11 billion in total assets under management.

We had another quarter of solid revenue growth even after adjusting for the large fee that John mentioned earlier. Now I will turn it back over to Dan for his concluding remarks.

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Thanks, Chris. 2021 is off to a great start. While it would be nice to see some positive movement in rates and improved loan demand, we're extremely pleased to be able to share the results we have reported today given what we've been through over the past year. Our teammates have done a tremendous job of taking care of our customers and controlling the things we can control throughout the pandemic. These efforts are certainly evident in our record earnings for the quarter. As we look forward, our operational and back-office teams will be busy closing and converting our National United Bank and FNB Bank mergers while also continuing the planning phase on our Cadence transaction. Our customer-facing teammates will continue doing what they do best: taking care of our customers and supporting the communities we serve.

With that operator, we're now happy to answer any questions.

Questions and Answers:


Thank you. We will now begin the question-and-answer session.

[Operator Instructions] And the first question will come from Jennifer Demba with Truist Securities.

Jennifer Demba -- Truist Securities -- Analyst

Good morning

Curious as to what your thoughts are as to when loan demand is going to be returning. Right now, it seems to be the big question for the industry right now.

I'm curious what you're seeing in your pipeline and what you're hearing from your clients right now.

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

The pipeline continues to be doing well. It's just we continue to get good payoffs. And that's a mixed message that you hear from a lot of our peers. We hear some peers that have been saying they don't know when loan growth is going to happen. We've got other peers saying that they expect significant loan growth in the back half of 2021. And I think the answer for us is probably some of both. I think it's part footprint-driven. In parts of our footprint, we're seeing lots of business activity and potential opportunity to grow some loans. And in other parts of our footprint, still relatively slow.

Chris, you want to talk about pipeline?

Chris A. Bagley -- President And Chief Operating Officer

Yes, I'd jump in there.

So I've not been through a pandemic before, nor have I had a PPP or PPP program in our process. But I'll make a couple of comments there.

When you talk about loan and the energy it takes to originate loans, we did 7,527 loans in the quarter that were PPP transactions. Those don't just happen by themselves. So that's almost one location -- one loan per location per day when you look at it that way.

So PPP is also, I think, eating away at some of the community bank demand for loans. So if you're a customer that needs a loan and you're getting a PPP loan, how many loans are you going to get in addition to that and when do you circle back into the loan market? So to kind of answer your question, as we look at the second half of the year, we're seeing businesses open as the communities open.

We're seeing trade and some business practices normalizing. More -- they're going to come in different stages. Obviously, we're seeing slowness in hospitality, large CRE, retail type or lease-type commercial and healthcare. But we're starting to see opening up in the commercial and C&I world, specialty transportation, some industrial, C-stores, those type of things.

So I think it's going to be a mixed bag as PPP rolls off and then other business segments open at different times going forward.

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Yes, we're in the same general economic environment in our part of the world as you are where there are parts of the country that are still relatively closed.

Still parts of the country that have got limits on occupancy in different facilities. And most of the limits across our entire footprint have been removed. So there's no limits on indoor restaurants. There's no limits on pretty much anything.

You heard me say a few minutes ago, we're in the process of reintegrating our folks back into the office. So we're lucky to be in a footprint that's ahead on that.

Obviously, we're watching to make sure we don't have a relapse back with the virus, but we certainly were encouraging our folks to get vaccinated as soon as they can.

Jennifer Demba -- Truist Securities -- Analyst

Okay. My follow-up is on residential mortgage.

That obviously was incredibly strong last year, still relatively strong this year. Are you thinking that the spring and summer selling season is going to be pretty healthy based on what you're seeing right now?

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Yeah, the problem is product. There's not anything for sale. Things that are for sale in our footprint are being moved very fast.

So certainly, there is opportunity out there. People are hungry for residential properties. There's just not enough product on the market for sale to keep us at the same levels where we were before, and the refi business has slowed down.

So I think our normal spring/summer time will be good. I don't know that it's going to be as good as it was last year.

Thank you so much.


The next question will come from Kevin Fitzsimmons with D.A. Davidson.The next question will come from Kevin Fitzsimmons with D.A. Davidson.

Kevin Fitzsimmons -- D.A. Davidson And Co. -- Analyst

Hey, good morning everyone,

Hey, Dan, with the Cadence transaction, I was wondering, there's a lot of focus, obviously, on Texas and getting a bigger presence there, but you also inherit this -- or add this presence in Metro Atlanta and Middle Georgia and the Florida Gulf Coast around Metro Tampa.

And I'm just curious what -- where you see the combined bank going from those positions in terms of -- do you take those and expand further? Or maybe you don't need to expand Metro Atlanta any further than where it is, and you just ride the growth in that market?

But maybe more specifically in Florida, that's just -- I know you're already on the Panhandle. But now you've got -- you'll gain a big position in that market.

Do you have any interest longer term in expanding throughout the state?

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Yes. Great, Kevin. I think those are two great growth markets that we have not been in before.

So we certainly are looking forward to continuing to grow in those markets. The teams that are there, I've been able to talk to some of the folks on those teams, great teams of people in those markets. And frankly, the opportunity to continue to expand the team and expand within those markets is very important to us. Florida as a whole, we can now connect the dots from the Panhandle presence that we have down to the Tampa, St. Pete's presence that is already there.

There's great opportunity across the state of Florida for us. And when we can find good bankers to join our team, we're putting them on our team. And we will not stop doing that because we're in the middle of our merger process.

We want to continue to grow. Both of us, both the Cadence team and our team have both been able to continue to attract producers over the last several months, and I think we will be able to continue to attract producers going forward to help us grow, not only in those two markets because they're very important, but in all of our markets.

Kevin Fitzsimmons -- D.A. Davidson And Co. -- Analyst

Okay. Great.

And just -- this is -- when other banks hear about a large transaction like this, they always are quick and probably you guys as well when there were other transactions among your neighbors that point to the opportunity for taking business and taking talent.And so obviously, it wouldn't be a surprise that some of your competitors will be talking about that opportunity.

And so how do you -- being on the other side of that now, how do you ensure that you keep the folks and the business you want to keep when folks are trying to poach that?

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Yes. We've been on both sides of that game also, Kevin. We certainly want to take advantage of opportunity when the opportunity presents itself. Our business is all about people. So it's how you treat people. It's how you take care of your folks. And if we keep doing what we need to do to take care of our people and keep them engaged and enrolled and feeling good about what we're doing, we certainly want to make sure that they feel needed. We want to make sure there's retention, incentives for our teams.

And I think we're doing that today. And I think, again, as I've made the rounds, you heard me say a little while ago, as I've been able to make it around -- Chris actually jumped into Florida -- or jumped into Georgia for a little bit, I've been able to travel a couple of our other states, and we're traveling again later today. Everybody we're talking to seems to be really excited because we have just not a whole lot of direct overlap. So it's not as much stress on any of the teams because the lack of direct overlap.

Kevin Fitzsimmons -- D.A. Davidson And Co. -- Analyst

Okay. And just very quickly on that same topic.

You guys are changing the branding name of the bank, and maybe you could just go into a little detail on that.

From what I understand, maybe the word South in BancorpSouth you felt might be a little limiting in Texas and maybe not fly as well even though you guys are in Texas. But -- or maybe it's just one of those negotiating things that you feel that you throw to the selling bank.

But it does present -- you have a pretty expansive footprint and you're going out of your way to change the name of the bank, which presents not confusion, but it's going to present an event for your customers.

So I'm just curious how you approach that decision and what factors you weighed in changing the name of the bank and maybe why you don't think it will be such a big deal at the end of the day.

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Sure. Our name has been a question mark for many years.

Our Board has looked at our name multiple times. As we move up North into Missouri, some of those folks -- as we get further North into Missouri, where we are in St. Louis today or Clayton, I'm not sure they really think they're in the South. The rest of our footprint today is the South, but we've had geographically limiting names now going back from almost the beginning of our company, 140-some-odd years ago.

We were the Bank of Tupelo, we became the Bank of Mississippi, and then we became BancorpSouth. And so those geographically limiting names has been on our Board of Directors concern list since I came here eight years ago. We came close to making a change several years back and didn't. And this gives us opportunity to take a clean brand that has a fantastic reputation in the markets that they currently serve and make it what we want it to be on a go-forward basis.

So we saw this as a real opportunity to help us and line us up for future growth as we continue to look forward. And you're right, it certainly is -- when you've been on the same team for a long time and you have to change jerseys, that's hard. And so we're going to spend a lot of time and effort talking about that.

We're certainly going to spend time and effort in the markets with our customers, making sure they understand what we're doing and why we're doing it. And frankly, this isn't going to happen for the next 12, 13, 14, 15 months while we go through the approval process now close, and then we've got to get to full integration before we actually start changing the name on some of our buildings.

So there's plenty of time to make sure that we're communicating this to our customers in a way where they understand what's happening.

Kevin Fitzsimmons -- D.A. Davidson And Co. -- Analyst

Okay, very helpful. Thanks Dan.


The next question will come from Jon Arfstrom with RBC Capital Markets. Please go ahead.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Good morning.

The name wasn't Wanchita, was it, that you were going to change it to?

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

That's a good one, Jon.

No, that one was a little limiting also in the spelling category.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Okay. All right. We're a long way from that, clearly. But a question for you on mortgage.

What do you think the number of producers looks like in a year? I guess I'm curious about your plans for expanding that business.

And does the larger footprint mean that you need to have a larger presence and you're hiring producers?

Kind of walk us through that.

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Yes. I think that the Cadence mortgage team is a great group of producers.

So I think if you're talking about post-closing, they've got a great group of producers that will -- we're looking forward to plugging in and making sure that we can all be on the same team and produce mortgages together.

We're at 160-some-odd people today. But frankly, when you look at the expanded footprint, there's great opportunity for us to even expand further than the current Cadence producers by making sure we've got good presence in Georgia and the Southwest Florida side. So I would expect to see that those numbers go up.

Clearly, the mortgage business is a question mark as you look forward as to what happens to us if rates start moving and the refi business stops. So clearly, people want to make a good living in the mortgage business, and I think there's great opportunity for us because people are going to continue to need to buy and sell the homes that they've got.

So I would envision growth in that area. Chris, do you want to jump on that?

Chris A. Bagley -- President And Chief Operating Officer

I would agree. I think we have a great platform and a great mortgage team and with strong leadership.

So in a cyclical industry that can bounce around a little bit, I think that gives us an advantage. And I think producers would want to join a stable production company going forward. And our footprint is expanding.

So I would see upward pressure on number of producers.

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Yes. Scott has taken care of leading our team and is doing a great job there.

Sharon is doing a great job for the Cadence team. And so I think when you put those two leaders together and you put the two teams together,

I think we've got tremendous opportunity to continue to expand.

Jon Arfstrom -- RBC Capital Markets -- Analyst

And then sticking with this, maybe this is for Chris, but Cadence has some decent fee businesses as well and treasury products, but it's your call here. And I guess I'm interested in insurance as well.

How would you grade yourself?

How do you think you've done in selling the insurance products into the commercial customers of acquisitions that you've done?

How has that gone?

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Yes. So remember, our commercial insurance brokerage is a bigger ticket commercial business, and we've been a community bank model.

So when you talk about forcing those cross-sells across our lines, we have not done that. We've referred -- we've done OK at referring business to insurance. But coming back the other way, most of our small business customers are not the same type of customer that the big P&C brokers are looking for.

On the other hand, as we've grown our C&I book ourselves, and so we've got in 25 or 30 people on our C&I team today, that relationship back and forth with insurance has been very good. The insurance team has been very pleased.

Our bankers are pleased to go with them. And so as we've been out talking to the Cadence team, I think they see that as a positive piece.

Chris, you had some conversations directly about that.

Chris A. Bagley -- President And Chief Operating Officer


Just to emphasize that the connection between our insurance team and the community bank side of the house is not that strong because of just the size of the transaction...

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

It will never be strong.

Chris A. Bagley -- President And Chief Operating Officer

It will never be that way.

So what you're seeing here is a better alignment of business and cross-selling opportunities to the corporate C&I space.

Clearly, Cadence has a big book there. And those -- our experience has been in our rolling out of our corporate and C&I initiative over the last 24 months, that that's a great alignment.

They work really well together. The introduction to the CFOs to the large corporate space is a perfect alignment for our employee benefits and our P&C sales force and insurance professionals.

Jon Arfstrom -- RBC Capital Markets -- Analyst

That's helpful and makes sense.

And then maybe one for you, John. I know it's -- you're not alone in lower net interest income for the quarter. And I know there's day count issues.

But how do you feel about second quarter net interest income growth?

Is that possible given some of the dynamics that you're seeing today?

John G. Copeland -- Senior Executive Vice President, Treasurer And Chief Financial Officer.

How do I feel about it?

You're very faint, Jon.

Was it how do I feel about the second quarter?

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

The second quarter NII. I think we feel better already because we have more days in the quarter, Jon.

John G. Copeland -- Senior Executive Vice President, Treasurer And Chief Financial Officer.

Well, in the -- let's frame it in the context of the possibility of continued low growth in the loan portfolio or even flat growth in the loan portfolio.

What's the liquidity going to do?

What's all this excess cash in the system going to do?

That is the main driver of our margin squeeze is putting another $3 billion or $4 billion in the investment portfolio that we would have rather be in the loan portfolio at 100 bps. That's what's squeezing the margin, right?

So if the cash is going to slow down, is deposit growth going to slow down? If that -- if it does slow down -- because we seem to be exercising pretty good discipline in our loan pricing, not chasing deals. So our loan yields are holding up pretty well, plus the rate protection that I've always talked about every quarter, where we have about 50% of our variable rate loan portfolio at floors already. So the loan yields are holding up pretty well going forward. I think we should continue that.

Deposit cost is kind of the bogey here with the deposit growth. I think that the opportunities in the deposit book revolve around our CD book, about $2.5 billion in CDs that are repricing lower. And in public funds, we got public funds at mid-70 bp cost that are going to roll off, and we can reprice those as well. So we do have some levers to pull on the deposit repricing that's going to help the margin.

So is the cash going to start rolling in?

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

That's where I was going, Jon.

I mean if you'd ask us in our call three months ago if we thought we were going to grow deposits at a 30% clip in the quarter, I probably would have said, no, there's no way we're going to grow deposits at a 30% clip.

And here we are. And we're not alone.

I know others are doing it, too. So the liquidity that's flowing in is just very damaging on the net interest margin side.



[Operator Instructions] Our next question will come from Catherine Mealor with Keefe,Bruyette and Woods, Inc.

Catherine Mealor -- Keefe,Bruyette And Woods, Inc. -- Analyst

Thanks, good morning.

A follow-up to the margin, and I apologize if this was discussed.

But can you talk about just loan yields?

And your loan yields have been really kind of stable over the past couple of quarters.

How much more downside do you think you may see that, especially as loan growth starts to pick up in the back half of the year?

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Yes. If loan growth happens, then clearly, that can change some things, too, depends upon what types of loans are coming in.

If we're able to grow C&I credits, sometimes those are skinnier priced. But we're also seeing opportunities in other credits. So we've been able to hold loan rate.

John, do you want to jump in on what's happening there? Or Chris? Either one?

John G. Copeland -- Senior Executive Vice President, Treasurer And Chief Financial Officer.

Well, I mentioned pricing discipline.

I think we've been very disciplined in the pricing on loans, and there's a lot of moving parts to that. We've talked about deposit rates and the opportunities to lower deposit rates as well and the price protection on our rate floors.

So I'm optimistic. I'll just repeat the question I ended my last comments on, when is the liquidity going to slow down? Putting an extra, gosh, $5 billion -- $4 billion, actually, $4 billion in the investment portfolio...

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Over the last 1.5 years.

John G. Copeland -- Senior Executive Vice President, Treasurer And Chief Financial Officer.

Yes, over the last 1.5 years, especially ramping up last year, beginning early in the year, going in great in -- straight into the loan portfolio just to put it to work, that's what's diluting the margin.

Chris A. Bagley -- President And Chief Operating Officer

I'll just jump in and add. It's competitive.

So we're seeing loan rates out there in the 3s.

We've seen a few with 2s in front of it, a two handle. So keeping -- John's right, we just have to stay disciplined and compete on where we can and when we need to, to protect relationships, but

I think just remaining disciplined on the loan pricing. Hopefully, we'll get some upward pressure on the yield curve and be able to support higher rates from a fixed rate perspective going forward.

John G. Copeland -- Senior Executive Vice President, Treasurer And Chief Financial Officer.

Catherine, 1.5 years ago, our investment portfolio was about $2.8 billion, which was 16% of our earning assets.

At the end of the quarter, it was $6.6 billion, which is 30% of our earning assets.

That sort of tells the tale right there.

Catherine Mealor -- Keefe,Bruyette And Woods, Inc. -- Analyst



The mix shift for sure is the driver. I'm just -- I'm looking at just loan yields and trying to compare that to -- like one check I had as I'm going back to kind of 2015/'16 levels and seeing where loan yields were there and comparing that to where you could bottom, and you're at like 4.60% now, but you were maybe more like 4.20% back then. But you've also done a lot of acquisitions between now and then.

So I'm not sure it's totally comparable.

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

I would not think that's totally comparable, but we're clearly paying attention to what's happening on the loan pricing side today.

Chris A. Bagley -- President And Chief Operating Officer

I do the same thing, Catherine. I did the same exercise.

When I look back at that time, rates had been low for a long, long, long period of time.

It dropped off the cliff here. So what it looks like going forward is the question, so what does all this liquidity do to rates?

A lot of questions I can't answer, but I don't know that it's exactly the same apples-to-apples as '15/'16.

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Because you're saying prime had been that...

Chris A. Bagley -- President And Chief Operating Officer

Yes, prime had been that way for years.

Yes, it would be -- yes.

Catherine Mealor -- Keefe,Bruyette And Woods, Inc. -- Analyst

Yes. That makes sense. That makes sense.

And then maybe just on the reserve, how much further reserve release do you feel like you've got?

Do you go back to day one CECL,?

I guess, kind of thinking excluding Cadence, so let's just kind of take you as a stand-alone basis, do you go back to day one eventually?

Or if you have flexibility within CECL to kind of give yourself a little bit of wiggle room for growth and then with, of course, Cadence coming on?

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Yes. Cadence is clearly going to change that, hopefully, before we get to the end of the year.

But our CECL model is our CECL model. And so we're going to do what it tells us to do.

The answer to your question about where we are from an opportunity standpoint and can we go back to where we were?

I think that's really dependent upon the forward-looking economic environment that's out there because that's really what's driving the model.

So on a forward-looking economic environment coming into last year when we changed to CECL, things were looking pretty good until about 30 days or 45 days into the year when things all of a sudden changed pretty dramatically.

And we could get back to that looking-pretty-good situation. So I think that you're -- I don't know that I have a direct answer for you, but there's opportunity there for us. We would like to grow into what we have. But clearly, we're going to follow what the model tells us to do


This concludes our question-and-answer session. I would like to turn the conference back over to Dan Rollins for any closing remarks. Please go ahead, sir.

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

Thank you all for joining us today.

If you need any additional information or have further questions, please don't hesitate to call us.

Otherwise, we look forward to speaking with you again soon. Have a good day.


[Operator Closing Remarks]

Duration: 39 minutes

Call participants:

Will Fisackerly -- Senior Vice President And Director of Corporate Finance

James D. Rollins -- Chairman Of The Board And Chief Executive Officer

John G. Copeland -- Senior Executive Vice President, Treasurer And Chief Financial Officer.

Chris A. Bagley -- President And Chief Operating Officer

Jennifer Demba -- Truist Securities -- Analyst

Kevin Fitzsimmons -- D.A. Davidson And Co. -- Analyst

Jon Arfstrom -- RBC Capital Markets -- Analyst

Catherine Mealor -- Keefe,Bruyette And Woods, Inc. -- Analyst

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