RNST - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the Renasant Corporation 2018 First Quarter Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to John Oxford. ahead. go Please

John Oxford

Renasant’s Good for Debbie. conference thank for members you Participating Thank Corporation’s morning XXXX us of are today Renasant this and management first joining teams. in you, call and executive quarter call. webcast

remind begin, expectations statements, differ of forward-looking statements our that rate we results in could not disclaim to reflect limited other We risk involve the over occurrence the results from to, and operating performance regulatory events this changed Before the but interest include, number filings and you in Securities fluctuation, may cause of results during factors any call some forward-looking discussed obligation other changes assumptions, the statements. our with materially anticipated to recent to unanticipated me let and factors expressed be which comments future forward-looking of uncertainty. time. A or actual factors Those to Commission. portfolio or update Exchange changes, revise are or

In in & CEO any of earnings of non-GAAP site reconciliation Renasant found measure our morning corporate under been to Robin be and A Chairman the E. posted this financial McGraw, I’ll has our which call to Corporation. Market And turn measures. that may of measures Investor addition, can we the the Relations’ non-GAAP most comparable be measures in the now GAAP some renasant.com section. release, tab such News Data over to discuss financial Robin?

Edward Robinson Mcgraw

you Thank us today. you, joining for Thank John. morning, everyone. Good

quarter, I’d company. opportunity place take of our key within performance our moving financial to events discussion for few this and Before to into the taking results like recognize a the

definitive locations the Inc., company and a and acquire agreement operates of Banking XX First, merger stock. Brand will Renasant Brand The greater Company a for pursuant throughout the announced Group the market. Brand on signing which to common Company the of Brand March the parent Holdings, Company, jointly combination of Atlanta XX, cash

December billion XX, billion Brand deposits. approximately XXXX, and loans $X.X approximately total in had total $X.X billion excluding in sale, of mortgage in included $X.X for As loans, approximately total assets, which held

third We’re old believe enhance the merger company in in XXX-year our attractive of the talent MSA. number year. this XX presence, MSA It’s this largest one most ranked MSA Southeast. with completing that in also this We is noting share the as our the market anticipate in Atlanta by Atlanta in the of the markets will excited to with GDP worth deposits We country. and pro quarter the Atlanta partner a population by strong largest were during merger significantly forma second

share quarterly March $X.XX per our previous to of quarter dividend and Board represents increase of The per paid of since a quarterly share XX, June dividend XXXX dividend as the in increase Directors XX, is to our yesterday, XXXX. to Secondly, the from shareholders cash be record XXXX. of third declared $X.XX a XX, paid June dividend the

for announce Finally, career. Waycaster, moving an our Succession our achievements. our the XX years, part announced Chief spends in has company company’s our into he of Mitch my He privilege Officer almost and has be May banking will and impressive previously role of to been Executive Mitch honor it’s an as on X, that Plan. President, Board integral

Officer, formally CEO, Mitch his becoming our us essential been oversee of already in assume many exceed of who the strategic Chief role and on has the of company. daily COO to taken maintaining helping Officer. Kevin addition goals or our to responsibilities duties is as was well meet will Kevin while Chapman has the suited Chief operations Operating In of formally Financial the –

investor remain senior although Kevin in add as active of with M&A to relations, CEO, our and I’ll the of process working management relinquishing and continuing forward I to strategic Chairman, Mitch, Executive forward. planning, look our duties that the company executive oversight. rest team Board-level company I’ll be me in Let our move

to Mitch the discuss quarter’s this turn over Waycaster financial I’ll Now Mitch? results. call to

Mitch Waycaster

Robin. Thank you,

we balance XXXX billion at XXXX. were assets XX, loan as total as to XXXX, linked-quarter March first loans December approximately the first on approximately growth compared the XX, Total of at X.XX%. increase about XX, an of XX, XXXX, were March XXXX, $X.X $XXX at at to of XX, as Looking total XX, which $X.X quarter quarter at loans December $XX.X annual Non-purchase compared an annualized rate billion look our at increased to approximately March billion XXXX. sheet, XXXX to billion, of represents compared $X.X an basis. new billion XXXX, $X.X production XX% at or at $X.X million million, had we billion from If $XXX in December

Tennessee. was that Looking and XX% XX% markets XX% production, at Georgia, the Alabama contributed from in Mississippi, that to and in from XX% Florida,

region the each State continuing produce in of our quarters, number of and plus we seen we’ve production. As last see XX% to

in at $XXX Looking in XX, million Mississippi, If compares XX-day Tennessee, in last XXXX. break our down next or in we March produce should at non-acquired $XXX specialty in pipeline our XX% by XX% $XX growth to lines. That forward, December approximately in period year is State outstandings is days. and XX Georgia, million Alabama XX% XX, the and pipeline and XX% This same in million. $XXX Florida, commercial and region, pipeline XXXX million XX% at

low strong pipeline throughout to growth we to and see single again continue We expect high XXXX. double-digit loan a

first X.XX% first the fourth the loans XXXX for XXXX. XXXX, of as of For X.XX% and of the to the quarter yield total on quarter quarter was X.XX%, for compared

$X.X of loan of billion, for XX.X% XXXX. deposits for collected the XXXX, average March XXXX December interest to X.XX% of charged-off first yield of XX, the $X.X period income average was the XX.X% first the billion, on fourth quarter Excluding in adjustments loans, increased for and from for XXXX. first accounting XX, XXXX averaged for deposits our for previously the bearing or XXXX. or X.XX% quarter at deposits billion X.XX% Total deposits purchase up quarter $X.X from of at same billion XXXX, to compared and core Non-interest quarter $X.X

first deposits the XX basis points XXXX cost XXXX, to the basis the points basis quarter quarter of quarter For and of for were XX first XX points, for of as compared fourth total of XXXX. the

Looking XXXX. total at XX, leverage XX.X%, was equity our XX.X% our X.X%, capital capital our at tangible ratio common and ratio was ratios, ratio March was risk-based

minimums Our were excess as to well-capitalized. regulatory be capital of are all regulatory ratios required classified in

quarter the few – to Kevin? for for our discussion Now over I’ll turn of call first results. Kevin further

Kevin Chapman

Mitch. you, Thank

first as compared the approximately million, to quarter at of the results Looking million of for for $XX was quarter our net first XXXX, XXXX. income $XX

Our XXXX, the quarter to $X.XX as was for first for diluted EPS $X.XX first XXXX. quarter the of of compared

cost $XX first we incurred impacted diluted of of XXXX, to million $XX related merger, EPS to the for the quarter, fourth Net our compared During and interest Brand million the for million first for income $X.XX. the which quarter first XXXX by the first quarter XXXX was quarter quarter merger XXXX. $XX of the of for

loans $XX.X for quarter same the for for of Excluding points The first and deposits fourth purchase million increased collected fourth coupled accounting million, quarter XX we XXXX, our in income first compared for X.XX% XXXX to XXXX. for adjustments was Renasant and and interest as – and XXXX. legacy with Metropolitan, to for million X.XX% loans, the the on of of on deposit fee any XXXX $XX quarter addition interest basis period $XX net charges first the and loan the of quarter products, commissions the of of quarter growth XXXX Noninterest fees the X.X% in deposits to of charge-off XXXX. compared first from to to and quarter service growth income the compared margin contributed previously in income on

to strong, the of the Shifting all fourth million including at Our banking of first mortgage year for of to quarter XXXX $XX and million well $X.X of quarter due as as for indicator strong as loans fourth asset, first the XXXX, and first and quarter million XXXX $XX.X for income $XX.X to compared was warning past as watchlist. quarter was for of asset our early our million division compared first days of the started March metrics the internal for metrics, XXXX. Noninterest for near million quarter to remain the quarter historical nonperforming million, to XX, in at such the $XX.X continue our expense nonperforming XX XXXX, or $XX.X XXXX XXXX. overall quality credit credit loans lows to quality being mortgage XX

I’ll ratios. For refer numbers specific on press financials, or our additional for you release our details to

to the pass I’ll Mitch, Now call you. back

Mitch Waycaster

Thank you, Kevin.

the past service call our Renasant shareholders thank years. moving on leadership we as and over of Before of Directors, Board Robin into our the of CEO his behalf and outstanding company, for XX Q&A,

from this to XX from $X.X time, to X,XXX. XXX billion our to Robin less more led and associates in billion Southeast locations Mississippi from in locations than XXX assets During than company throughout the $XX.X

market $X.X a million grew November today. in of capitalization to XXXX billion Our $XXX from

With Executive and success of great these your team as as of remain success. on Robin, Chairman. as has you one accomplishments, to during we it’s you CEO, Robin’s that even been as will part tenure our CEO, see your congratulate we’re tenure excited

Now, I’ll call. the our and Q&A call the Robin pass remarks back for closing of to portion

Edward Robinson Mcgraw

is believe I’m what Thank to years you, Mitch maintain year – current we accomplished kind to of for XX for we together. Renasant with In our the nearly at strong opportunity very opened bright Board our results. future closing, have I’m grateful the I the management and remarks. me direction the Mitch, for and a gave team. range our leading ago, strategic with proud

set the on in environment, successful We factors profitability in record as driving expense strategies rate our were on competitive focus our add is to believe structure. with maintain for Brand our continued opportunities company, around for continuity another quarter. we our stage earnings the Renasant Our leadership continue capitalize containment to strategic our this family, year interest behind and for coupled

I’ll back over questions-and-answers. turn to Debbie, the you for call Now

Operator

the begin now comes Raymond question-and-answer from will first [Operator with Rose question Instructions] James. We session. Michael The

Michael Rose

are How guys. you? morning, good Hey,

Edward Robinson Mcgraw

morning, Good Michael.

Michael Rose

good at margin. this you, year. improvement in for hike me least, more for, one Kevin. the maybe core rate Give Hey, Obviously, expectations

June. guys the scheduled with flat being You accretion? about the up at updated on that’s one what us the changed talked And portion this in move to this year hike margin? we NIM the slightly of looks through you Can core It purchase as for, least, like previously potential and Thanks. the your thoughts year. accounting for then, expectations give rate some had are

Kevin Chapman

Sure.

to only minimal whole as margin, about margin did we occurred the X QX. did definitely look QX, Also, if rate the positively it deleverage strategy just happened in – although a impact from expand that so to points. amount XX Michael, points, hikes margin in yes, So, we relates basis what benefited basis

strategy. just our And our bit. portfolio. balance As we the over the primarily we timeframe only bring curve. is that to is, We bit have million asset than purchased little due margin sheet a to yield earning QX reason steeper down the little five our a a about the re-lever another re-leverage little still and the re-leveraging $XXX extended have lower in XX% curve, QX, will and repurchase. million of on much on strategy, ourselves And the do to we repurchased XX-year security in that $XXX a we what in found in We’ve anticipated particularly $XXX point average

QX what horizon somewhat yielding and perspective of the In into We They $XXX we’re And securities. terms, in we sell million purchased have we re-leveraging today’s tenure were on put X%. million, million. average what time our just $XXX there. about $XXX around so in in at we an doing rate extended QX, came back and

it just And from QX felt at we curve. yield steeper we – just to – so sheet, advantage least, to prudent – a to receive we benefit balance take in smaller take maintain and benefit a didn’t

slightly we we As net as subsequent market going dependent what cost rate we out margin in We asset-sensitive. position do The the rate expect of as to movements interest as that movements. look what is we look to as we margin on more impact heavily be – quarters, We and do thing will it’s at our income as that we we year. seeing in that maintain – anticipate are are and funds. that during well anticipate positively do the

costs we going as little and ahead, of and We’re see QX, probably mindset and our containing re-lever movement as funds. funding the on of – look bit of QX. how in think, funds of QX our could and cost we of the seeing be a rate to very movements be goal going into in job We But I just cost good margin controlling variables compression we we that’s pressure deposits see we and then then and as will QX, cost did a beyond. QX, and – QX

Michael Rose

maybe follow-up, quarter-to-quarter. the loan I Okay, And just looks it’s on like color relatively flattish helpful. pipeline. Mitch, appreciate that’s a the It

You high that reiterated I you deal, the double-digit the single – at excluding the customers to Bank guidance Brand gives or assume, the obviously, And And kind And confidence could there what growth. be your that of upper-end low what the be range? would outlook that would deal? to to of are you cause lower-end? would at to excludes for you from get you maybe sites upper-end? Thanks. the that cause any increased the What

Mitch Waycaster

including from mentioned, prior footprint, $XXX of are be very Sure. And year, that commercial Brand. Michael, a prior lines sentiment we’re to producers correct, Customer hearing million our was at I $XXX would our across quarter. continues you include million $XXX good. specialty not all it at what

forward, the high optimistic low in very we’re be double-digit. So will that, we single, going

I that all you will look course, lines. a the believe make move And outlook. see again, the consistent mentioned, production we throughout Of case, markets. I we’re and Hopefully, footprint customers optimistic several that the continue the Certainly, to for as what continue. throughout continuing to we guess, business seeing last again, from quarters, total if on from that

XX-day low that going So a where look We feel decrease think, we’ll to you enter if we clients. experience And that, we XX It – at listening pipeline, feel to prior feel would good compares like are quarter. as the production out we the QX, well you first you where double-digit the to single, look XQ, comfortable look you’re forward. in at when feel further in good range. and We typically again, – in we again, growth. high QXs I you continue see had

Edward Robinson Mcgraw

that. Hey, Michael, one to thing add to

look that If as non-purchased Mitch generate at – of did production annualized our upwards you XX%. just growth mentioned, growth of

in both the see runoff, compared utilization unexpected some rebound do and our some QX, of our that bit little did uptick which non-acquired line Typically, an That that to did Now thing in is see was QX, seasonality utilization into a related was some have One to have we there. found we we prevalent acquired in QX. as we seasonality portfolio. previous portfolio payoffs acquired was we line the quarters. get and

did decline, $XX have mute of typically, I’ll just it was on should example, we just you were total million production loans. the utilization. HELOCs is good, per are XX just that the a – which back and actually HELOCs So about some just give million million a declining, quarter, comes An one to seasonality we million saw in HELOCs, in line portfolio example. $XX flat slightly category, about to is $XX swing growing our – for our to HELOCs $X about to really they which

Mitch Waycaster

And mention one [ph]. Michael, thing other is I’ll well

have new company to the XX four producers well or specialty During the recruit Tennessee, market And the in and go new quarter, talent leaders line in continue during company. markets, We past, had in two joined in production first itself join first we as continue new the to that units. our will in forward. Georgia, we drive two as Mississippi quarter: is three in the

Michael Rose

We’ve in phases it then the consumer specifically, years. back? the out side. comment. Maybe But that’s be five I seems deleveraging interest quarter. confidence the to over And that’s relates Tax follow-up if deductibility like, actually going a of it the lot on What to on the some this at from Okay, there next heard can that side, the near-term, least, utilization banks line gives with the Cuts, come as of you helpful. just clearly, that on could commercial HELOC

you what actually that So Thanks. utilization could gives confidence you line from here? see increase

Mitch Waycaster

with Michael, I’ll some on comments start that.

comfort brings we that hearing I line think, one XQ. utilization, from our what thing typically clients. that we’re pulled just in And that back have is seen

little more as mentioned, unusual, Kevin QX. not that that’s a So pronounced

cash So availability could impacted certainly that. have of tax the maybe change the from

at may HELOC on and that question listening think, return just expecting again, client point the I seeing to sentiment. each quarters this have we’re and HELOCs. from in been as of well treatment And our pipelines there early the standpoint, to some about listening

Michael Rose

Thanks. guys. Okay,

Edward Robinson Mcgraw

is this Rob. Michael,

back underlines the balance we have line The first first issue year quarter utilization the going Going the year a and – than or if But in the picks two very first the year. that been has his to just up last historically, that for more of quarter quarter the looked, the back in always you anomalies in see prevalent. then utilization light did back and go were line utilization of it we look past. seen

Michael Rose

Thanks guys. for questions, my taking

Edward Robinson Mcgraw

you. Thank

Operator

question next Matt with Olney from comes Stephens. The

Brandon Steverson

good This Brandon is morning, for guys. Olney. Hey, Steverson on

Edward Robinson Mcgraw

morning. Good

Brandon Steverson

I the ask give guys this of Hey, you question missed did all to if quarter? you this wanted in refi I’m number sorry remarks. I But opening mortgage. a on versus the purchase

James Gray

No, as you But this volumes little bit indicator. a during is volume And purchase, Jim our lagging first log Gray. closed you the volume, we give as XX% refi know, a our XX% because percentages, I’ll of far were quarter. closed were as

Our first was our log volume $XXX And for our was the refi volume million. XX%, XX%. purchase was quarter

more seeing, a that continue. as and a So will to from that of we we anticipate little refi purchase shift are bit anticipated,

Brandon Steverson

I then Got I jump And also to it, a you. Kevin, okay. think, question back for wanted to over there’s securities.

to million that $XXX mentioned $XXX repurchase million securities. You on have left to you still

to over $X So back we’ll it’s see up say fair that billion? that go

Kevin Chapman

Yes.

Brandon Steverson

before is targeting? the also not that level you’re back And billion $X that was

Kevin Chapman

were where QX. We’re looking at giving it close levels to in the we

Brandon Steverson

guys. Thanks, Understood.

Kevin Chapman

Thank you.

Operator

question O’Neill. Brad comes with The Sandler next Instructions] Milsaps [Operator from

Brad Milsaps

good guys. morning Hey,

Edward Robinson Mcgraw

Brad. Hi,

Mitch Waycaster

Hi, Brad.

Brad Milsaps

book, the it do back taxable book change, as see, the follow-up coming muni to to those coming would where was given bond you of well? question. see just on tax the up or the in purchase Kevin, Most you

Kevin Chapman

purchasing a have change been the is better of seen and because No, a a muni yields in really, This bit not it’s muni we primarily that in in book. becoming we the security seen. anticipated the good Yes, haven’t book. in little taxable We haven’t we question.

but change haven’t book the muni focusing, we position We’ll yields And look securities unless see probably position. the to our muni won’t in been a as change change. to we tax and the we keep in we taxable So that but really did building been back concentration at opposed haven’t, book. prior more we that as the

Brad Milsaps

to we didn’t expect also would that’s you down third you like of the And level. look Great, like, was actually period-end security, look in move period-end to the up. quarter It borrowed this even signs helpful. back was kind but

Just of you the plan how curious purchases? those of fund, kind kind remainder the of

Kevin Chapman

horizon not Well, time to reason years our long-term funding also goal focus why we’ve another that continue to funding extended to and the asset, borrowing. long-term is deposit short-term that’s being four somewhat with five growth just a on of FHLB

wholesale year-end. our Even funds bank’s and Renasant, more growth in every I’ll but did by balance saw deposits while So on growth, everybody’s we see that’s long-term, come sheet to Admittedly, book. driving a book loan core not deposits way, we’re say FHLB good in exclude, up. in that’s – on the you the QX. also growth be goal just repatriate on deposit goal. growth, going have the side. balance advances focused not some is brought at of security the We less deposit our core sheet And reliance goal, dollar of But loan you if will that dollar, the for funding that it’s that’s growth to

and was in XX% of deposit that have we future momentum quarters. back have growth with them come back April. even fact, coming But the exclude that, other continue QX In you X% good to in still if in

Brad Milsaps

Thank you. That’s helpful.

Kevin Chapman

Brad. Thanks,

Operator

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

Edward Robinson Mcgraw

time appreciate interest We with Debbie. Cooperation again look forward you, speaking you to and Renasant everyone’s in soon. Thanks. Thank and

Operator

is now for conference concluded. The presentation. you Thank attending today’s

now disconnect. You may

Renasant (RNST) 25 Apr 182018 Q1 Earnings call transcript