RNST - Earnings call transcript Q3 2018

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Operator

Good day and welcome to the Renasant Corporation 2018 Third Quarter Earnings Conference Call. 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 with Renasant Corporation. ahead. go Please

John Oxford

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

are changed regulatory remind to discussed obligation begin, limited expectations statements, differ and the events of forward-looking our that unanticipated we in could assumptions, to other time. risk SEC. involve results but to from in not and portfolio this Before factors no reflect to, the include, undertake number update interest occurrence operating you of may cause of or results during the fluctuation, factors other results changes call some forward-looking the statements. materially with anticipated me let over We changes, or rate factors expressed revise our be which forward-looking future filings recent comments uncertainty. to A or actual performance statements Those

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

Robin McGraw

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

and improvement our are quarter core highlighted the a of significant third with XXXX, to results margin are strong by for ratio. We which stable efficiency pleased our a

once merger record for achieved per and and Excluding share. earnings again the expenses, earnings conversion we impact

successful merger evidence conversion on expenses, X.XX% to Our of our excluding and respectively. assets improved quarter metrics returns profitability and and average tangible equity, further as are tangible XX.XX% average our

added completed balance quarter Brand prior $X XXXX, the included XX X, of Atlanta, of September results on billion assets Brand area third which of approximately and operations company of in we in Georgia, The Brand are for Bank to Holdings, Greater purchase of the our Atlanta the results XXXX. accounting our parent sheet with addition, and adjustments. locations merger any In Group throughout mortgage

in currently divestiture Brand approvals. mortgage we anticipate of our of regulatory earnings quarter discussed necessary the following As fourth release, the the of completing in ’XX, all receipt

smooth banking XXXX. and to new accounts and clients excited we team are and We Brand early shareholders, a members welcome systems transition of quarter client core our look forward fourth from during of to

our Officer, turn call discuss President to Executive Now, results. to and Mitch financial I'll Chief over the Waycaster quarter's this Mitch?

Mitch Waycaster

Thank you, Robin.

our million Looking as net third quarter the XX.X of million ’XX. ’XX, the $XX quarter was at income for of third to compared results for

$X.XX quarter to and Our basic and were diluted respectively the as of $X.XX third quarter for for $X.XX the ’XX. third compared EPS

During we merger our reduced conversion EPS associated the $X.XX. incurred Brand expenses which quarter, and merger, with the

XX, ’XX Turning ’XX. our at to investment focus billion billion in December were for at billion XX, at added to Total at ’XX. as balance $XX.X assets $X.X billion approximately billion date. held compared XX, the loans acquisition approximately were September ’XX total X.X approximately at our compared December September to approximately as loans $X.X XX, X.X Brand sheet,

$XXX compared of be annualized compared production ’XX for and Excluding quarter first as net of ’XX basis. strong, totaled in ’XX to $XXX to nine months billion for the ’XX the $X.X an X.X% the was of new the same quarter billion in $X.X for growth third million period the third Brand, ‘XX. million on production of contribution as the Loan for nine of loan first to months continues

both increased XX, of recently our billion specialty growth, same disciplined will ’XX sides and to average first for the Non-interest loan our XX.XX% markets of sheet. bank, we talent strong which at deposits maintain credit in talent the bank and and and for future X.X XX, billion about we deposits of enhanced September or and deposits given compared bearing averaged optimistic commercial were are billion we Total our the commercial remain At our and $X.X addition balance core leadership $XX.X Brand. pricing quality, all from from XX.XX% margin in December months average at pipelines, ’XX deposits forward, of to production same nine Looking underwriting our billion while to ‘XX. or time, period grow ’XX. X.X the by of and current of lines, manage

of added deposits. bearing quality in asset included $XXX.X credit ’XX, quality, overall metrics our continued $X.X acquisition million As strong. billion remain date, September Shifting to our non-interest which to deposits, the Brand in at

As in of million third including quarter, provided total credit internal we NPAs, lows. or loans the while to points net and XX assets, XX near X.X past a percentage metrics loan days quality at historic basis charge-offs were watchlist all X for our losses. are due Annualized

tier XX, tier our our at ratios, capital was XX.XX% ratio risk our X based our based was based X Looking leverage XX.XX% tangible risk common ratio was risk X.XX%, ratio capital capital ’XX. X total equity ratio was ratio X.XX%, capital tier capital and at capital XX.XX%, September our our

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

Operating discussion and will additional turn for Chief Renasant financial Kevin our Financial to of Chapman, Officer, I call Now, results. the over Kevin?

Kevin Chapman

the Mitch. the of million $XX X.XX% income million ’XX. compared third Net quarter for Net XX.XX% second quarter quarter was million the compared ’XX and ’XX for quarter of for the to of income third ‘XX. Thank $XX.X for was $XX.X as for interest third to second quarter the interest you,

quarter accounting continued of the second the the quarter. third ’XX. ‘XX. to points impact purchase XX margin of quarter to adjustments, points our for impact impact accounting when the ’XX purchase second compared compared quarter was of This Furthermore, from basis the to our the stable during Excluding margin decline of basis of was for XX adjustments

to second quarter yield the third on For of of was as ’XX, compared for ’XX. X.XX% the quarter the X.XX% loans total

Excluding purchase points increased quarter. our impact adjustments, of the loan previous basis the XX accounting yield from

quarter was total basis compared of compared of for the and for of quarter income the ’XX, deposits for For to XX cost third ’XX for quarter as XX.X $XX.X the points third points Non-interest XX the of million third second XX basis the for the ‘XX. second quarter basis quarter and million was million of points of as quarter the third ’XX XX.X ‘XX. to

’XX income contributed income million ’XX for ’XX was $X.X ‘XX. expense Our mortgage Non-interest quarter for and the for the the million of well. million the XX.X Brand quarter compared third our third to million continues $XX.X quarter Group. for the the third the of second of quarter quarter during Mortgage of Brand XX.X third million expense our to compared quarter mortgage noninterest for million was mortgage banking XX.X quarter banking for division to quarter ’XX. the the third as and ’XX. ’XX to of second third in $XX.X to perform of attributable for includes million XX ’XX Included million $X of Mortgage of

achieves ratio which linked an XX.XX% XX.XX% in ’XX core a improvement Our compared efficiency XX%. below to on was for maintaining third ratio quarter efficiency a our our represents significant and basis, efficiency the quarter of of goal ratio

Robin pass I’ll back for to call closing comments. the Now,

Robin McGraw

Kevin. XXXX a for of we're and first produced well strong strong you, positioned to results Thank closing, In months XXXX. we finish believe nine the

over the I'll call to Allison, turn Q&A. for Now, you back

Operator

[Operator will Instructions] from come of Our Stuart first question KBW. Lotz today

Stuart Lotz

know, smaller legacy margin. First back outlook I just Brand is and congrats for closing higher some lot deal moving NIM. the X. all, core But quarter an the sheet on over Brand balance My the of with the real of pieces a there with mid quarter Yeah. brought September leverage on first this also close. a question are

compression see to how quarter want this items? the of and to just from we where I margin as outlook into of fourth core XXXX, quarter so was related much temporary and for your some And go the here that

Kevin Chapman

Stuart, this is Kevin.

we than Brand slightly yeah, to was -- in for with be bit to opportunity at increase a still fact, slightly. still sensitive we they are. more positioned, So it the margin, were maintain still a asset asset as flat sensitive We similarly we it little are rate position. look we project

saw a to QX, rates as see positive rate is margin. flatter but it, we it for will saw yield well which curve, movements did income we up to on don't to we move net little put saw the QX, or if interest a of inflection it throughout view as pressure as beneficial So on for us, we we of out curve, the that particularly and If the some still what coming opportunity rise, longer end be bit. see we we’re

to stay that core just to would as margin view you impact little of more think be put than got opportunities asset And with related margins And pulled to -- had us. I that ours as and to some, we right are. pressure. sensitive to relates the it's not very increase I just still Brand, rates we for Their so our are it our back be they flat Brand positive any did add, it little remind bit I on to but core a margin. on top

rate operations. will on through come see their increases, that So as we

to typically couple so the throughout where X/X. we and acquisition liquidate accounting look reinvest did would we that securities security security did As of in reposition about portfolio Q did balance We XXX look we sheet, September. Brand’s and of at sheet, did reinvest balance purchase their -- in were items We reposition not on based a just with the borrowings, in portfolio, at we reinvest the that. that We take wholesale just million their the to opportunity QX. we date do not

be securities just leverage a from sheet, of reinvestment back coming the balance of liquidated. we into So, will those there bit the that little

Stuart Lotz

And the any impact I see know an from any on I in income, quarter. hard guess predict but accretion margin. we go up on fourth it's estimate to that, right the we'll to as now one follow

Kevin Chapman

are gauge hard Brand. to we with just [indiscernible] early on It's how

accounting Excluding don't Brand, necessarily view declining. that saw that were experiencing, as a been way. thing the we comments -- the purchase has by noted we in bad as We we

for grow, interest to current the run from but now, least continued to or despite the levels hard little what continues the contribution its couple to Right at will quarters. be I next be, accounting expect bit a contribution a of to rate income gauge it Our would to continue decline. it’s purchase at net exactly

Stuart Lotz

And sorry, the the to can know, expense start when I to cost of clarity and just one. place on through Brand is any you really the expense drove other we but XX% one saves when around the really taking tangible just ratio quarter, see cost When below saves the you on there? come this conversion -- additional start side? could efficiency expect

Kevin Chapman

Yeah.

first, So the weekend. for last question the is scheduled this conversion

We've but tell got the it that weekend. lot lot saves over a full run we that earnings has to we diligently this projected of due amount Brand our see in them working into on gone the make a you We what people that with run won’t to I – cost a where preparing of until our Difficulty] on we've cost of [Technical diligence. saves actually QX, The rate and sure So, right we are of effort already during can of top in success sits a for significant us the are rate. upcoming delivered September realized target projected be

a realized some portion and saves, cost portion. of if So already not we've -- those that significant

Operator

question from Rose Michael Raymond of James. The come next will

Michael Rose

a guys without Brand a update and to the growth, both lot some and wanted at just the good pretty sheet at we how of to had I on non-purchase balance and favorably on think compares look typical larger get with Brand, now both growth, bank get wanted loan just you then thoughts banks, loan that with other clearly certainly the core pipeline, have they some to at. about

Mitch Waycaster

This morning. Mitch. Michael. is Good Sure,

XXX in about prior Our pipeline see down growth did seen good million. or pipeline, by the back XXX.X line. XX% million, with it a and point, in distribution to adding pipeline, deal continue quarter your and the that to million before at I that $XX to minute circle of XXX million QX, have break production non-acquired. And business geographic flows, to compares strong. to your current remains XXX production And That to we million which Brand quarters, prior to strong region I'll is in we million that state, as led pipeline XXX and point, stands we pipeline in good and see

about was in XX% XX%, combine you Florida, Tennessee. XX% it If Alabama Georgia, and in and in XX% Mississippi

at Mississippi the specially in XX% or back that, So XX% million, in to XX in in should XX% in The as throughout past, typically million we've days. pipeline Tennessee, XX% production to But the circling in seen million result is of in current the the Alabama, XX in the XXX in close pipeline non-acquired geography. better XXX XX% of in XX% approximately of growth looking pipeline is coming lines. commercial of and outstandings Florida, Georgia, the

circling So, we pipeline. strong a back, continue to see

as good continue high the production XQ. with normalization of growth continued somewhat would We to single expect elevated net to go we to QX certainly mid to for into paydowns, be we prior quarter, guide in which and

Michael Rose

Can very out there, hold maybe you nature. guys not you – last about in this so competition, out commentary lot seems just some it payoffs, is talk competitive credits point, non-bank is on are know structural a be normalization I is of much smaller could there. there, this it that -- the likely others banks Mitch, of from more slightly the as because out than but

So the net obviously. quarters? less relative than what couple this it you seems Thanks. What guess, normalize paydown a could you that of makes it the as about certainly you actually was to over talk confidence quarter, next the last the or growth, like I production little quarter gives

Mitch Waycaster

do, underlying we percentage for sample attributed those, that's selling to as those continued quarter, point, paydowns a good to question, the hard look to question, and QX the to what saw we fairly Michael. the was or of and but being similar see at outcome it trying in prior our somewhat your about to we Good of predict When high asset. business those to payoffs, point your we

matter the payoffs fact, percentage that those saw a was larger the of pay downs. that the As of we

Next permanent does refis market talent, loss addition the this good we year to Again or begin whether extent. pipeline. what where our the specialty we feel with not that's that our bank, deal there, us a we've our and we feel match I the into give are would to simply had competition that's be to that joined relationship and markets XX commercial we That's the added the that very guess chose rates lesser metro match to go the where is our payoffs, our at to hard subside good be -- and it's flow, talent us our confidence markets, pipeline. positioned We point. team within we've talent and forward bank predict market in just to leaders. in our and about and core it's focus our the some would markets commercial that paydowns, Brand while really that’s logical lines as managers, our larger and our where from terms,

Michael Rose

rates as It Maybe That's mortgage you guys you of like appreciate to forward, work me impact out great color. bit. sort mortgage there quarter, business. come activity how here and there. have the business, and one projected quarter on little out going brand Thanks. breaking a in about kind itself more end. from comments little since any mortgage thinking the color looks this I down but go the the that's just know Clearly, volumes but any be we on so, guys the are purchase, guys a to or week bit you past of are mostly are in

Jim Gray

Michael, Jim this Gray. is Yeah.

the for volumes were third second quarter. from a quarter the little down Our

XX% on now. Our close is I as recall. an still Definitely history XX% we've our, about recent is down higher on retail a had is up the refi. mix about percentage, impact refinance XX%, to our lowest refinance, was purchase, percentage – of which can that a in at little to is Wholesale seeing probably XX% rates XX% particularly

refi have realtors track then, to retail channel last business. I of complement builders we focus grow good on, up lines also hiring and had relationship, purchase our not we and direct still and with continue had think and in have now I on started on markets is market, call it relied we're in X supplement to have our that a always And of Our channel wholesale line that mentioned that the our originators, to with our with originators business. records built continuing consumer will focus seasoned to

a we face XX brought some new rates up XXX inventories, We're more originators and particularly that slowdown higher quarter, our anticipate primarily markets. low to in our metro wholesale to looking our in large and little interest the volume, still X seasonality, AEs. Just originators course fourth due due do over the into XXXX. we We of

those the We also in prospects of from will point. originators just we in even which a we good them top have the the of any this haven't hopper the in really good picked always hopper our XX percentage is have market originator Savannah up We've And bank. also gotten and the now, at and market. about for a Georgia we what new into volume in convert

what So, direct recruiting on focus on we're retail continued do continuing the to is side always done focus to a aggressively new continue talent, we've wholesale, both on what consumer and And is and understand though a we've on maintaining doing, in even we impact business, we margins. good mortgage there rates. been the some future higher the that still do our see

Operator

question next O'Neill. Milsaps come will of Sandler from Our Brad

Brad Milsaps

expense just around if just terms up the on quarter, you of dollars. Kevin, curious and mortgage with to expense contribution the was was the parts of of this quarter. this discussion. in in could give part dollars a of expenses I particularly follow I wanted sort the moving from us know, or sticking piece Brand Brand what lot the quarter

Kevin Chapman

conversion, X.X, then expenses expenses Brand that top QX on The include come of added this and duplicate rate excluding and diplomatic our run million. that mortgage Yeah. in another or mortgage but were after X.X Brand would will total out redundant X they

Brad Milsaps

a there the of – of start Brand then run captured kind start get can rate show hit the you to you out cleaner you hope some that up. of and And would already cost quarter that the saves with -- you saved once mortgage to really so runway the little be first

Kevin Chapman

Correct.

Brad Milsaps

of to to was Okay. I move going deal know odd Were to of divest those that the closing? able also completed. happen? Did a loans, prior non-performing some -- part had million deal to the you And then to books, being as the that Brand XX off prior

Kevin Chapman

– were it group yes, is removed and of that had Brad, we we This sold investors those a to.

Mitch Waycaster

add completed July. would that was I that back in Brad,

advance done acquisition. it of So, well closing in of was the

Operator

Matt question come Olney Inc. from will next of Our Stephens

Brandon Steverson

on second that Matt. noted, we expected you is the deposit This off increase In up we for to on quarter. start you costs to in step saw that’s what I and deposit moderate cost. Brandon Steverson wanted the exactly that and saw quarter, this

wondering increases I'm level, was I this is sustainable that deposit Is it X cost going more pace believe, So a forward? increase bps quarter-over-quarter. of

Kevin Chapman

Yeah. and QX, eating going of Kevin. taken we the cost of the some and steps to to just competition see into ours several so. deposits. concerns We seeing and deposits think This on end to our would pressures QX of We QX we’re deposit that at responsive back throughout it is did and moderate had be just core start

a to rates of our moved that. portion significant address deposit we So,

and we do competition emphasis increase, to going been full would dollars of still mean stable we’re more mentioned, what balance priority to And smart the in will on out funding levels So year. a grow our We non-interest right that only moderate, we we percentage going And to the to that's including properly are and our be fierce our increases from the grow has that positive see right continue in balance continue did steep say increases. we and rising funding think that. funding. always environment over see in as more opportunity goal one pal, of core prudent funding, over more is to and I we compared from most we to continue that improve puts we on funding, I to the And and with about that we DDA it’s sheet just we'll our but continue to deposit Brand. QX funding but deposits but costs the just it doesn't have see base. comes the going saw we more do our moderate a here mix in to the not bearing as proper be goal, our we're how I in probably sheet fund we that maintain competitions now. and now, rate forward, anticipate with out. excluding would have a when to But still and in what line think be they'll earlier competition is with saw here recognize in it

Brandon Steverson

you’ve take goal some now like to being sustainable on and efficiency in that you expectation achieved more before cost And that goal XX% is that achieving efficiency the ratio, of then goal? looks to sixty be again and with the sub coming ask I -- efficiency appears also ratio wanted it and there there, Brand percent to lower, any saves for mentioned to

Kevin Chapman

Yeah.

one for been always much like and room our our an goal. key of continual or efficiency it's So, change, in a room improvement ROE. ROA There's our an for constantly ratio. there's continual That's indicators that improvement

So, -- is XX. first it to get our below goal that

I hasn't past from to That think to the goal higher to be get drive improve stated the here leverage it changed. base revenues. is in continue to goal expense off our -- that incrementally to we

we're Brand XX, to see stated XX.X, mortgage. handle of that that number below now, right incremental the now number XX so does But the that. below, are stated include the improvement say, that I have got will a we've would we of there, be off And goal we

of exclude the close in puts handle. If low-XX. you it the a Brand mortgage, XX it to operations the very It's

So, off what points is. is working basis a below reported current baseline the of our several here

in ratio we're here very on we’ll improvement about efficiency So optimistic the that see from the out.

Operator

FIG of Rodis John from come will Partners. question next Our Instructions] [Operator

John Rodis

from you from said guys that income revenues mortgage million. that was the is netted, against X is said were because know roughly mortgage netted you million, X.X Kevin, Brand expenses Brand I

is X of million? net So that the X.X

Kevin Chapman

gross. That's not. it's No,

gross So, X.X gross income of million. and X of expenses

John Rodis

the in mortgage So lost you in they mortgage -- the division? money money lost

Kevin Chapman

Yeah. accurate. That’s

John Rodis

billion. the over brought balances loan the for X.X held investment, Kevin,

at investment, were you they so difference? June million. XX, What's X.X held paydowns look the I'm billion loans XX sold for the Brand’s elevated. – assuming were you were If

Kevin Chapman

compared prior a business, No, close. portfolio there's That's that what it an to another sold portion of to John going indirect portfolio million. that our XX at totaled business it indirect XXX auto we auto The your line portion Brand about we the difference, sheet. prior with would to be that was we've and small sold June had And we to very X. component, be auto It to the September least is that weren't small brought over. portfolio probably of total – a going our a of balance be in long indirect term.

in ahead term loan portfolio, future of So made if liquidate in portfolio decision to growth well in or leverage ahead we’ll either the portfolio, short security we the and funds go types the in them up back went and to other maybe take those and similar sense. makes security that the to it

John Rodis

right So that that or sale portfolio in held has for is now? gone

Kevin Chapman

It's gone. gone. it's No,

John Rodis

XXX It Brand held in of sale, XXX held like is is for million XX roughly million. of increase or the the mortgage. million roughly in then looks So sale million for XX

So should think and what's other how about? XXX the we million

Kevin Chapman

is evaluating. consumer another this been There that of portfolio Yeah. we’re We've portfolio. loans evaluating

we're type it look evaluate date, for just at we held whether purpose, time, as at we term to a more we for purposes this or of it and paper investment still consumer or period the a in Admittedly, at move hold over for later we quicker for in for long it the evaluating include but at may out time, of sale not felt that whether that it bucket. bucket. it's we included to appropriate so As getting over held this, to held sale we for the XX/XX,

John Rodis

And is big portfolio? how that

Kevin Chapman

you discussed, Roughly the that million. XXX over amount it’s

John Rodis

mean, so, And what for timeline say, sort looking investment. of hold said, I so, like you could at? was if you're to it, just to back are going sell going come so, you okay, it to I

Kevin Chapman

a -- a probably be at two the It would quarter over timeframe earliest.

John Rodis

what, just this I effective XX% versus should was quarter rate quarter. then And What rate forward? one forward. we guess of other it question, last tax XX% sort going use going Kevin, roughly the

Kevin Chapman

we think The XX% range is appropriate.

Operator

Robin remarks. this back conclude gentlemen, closing to session. turn over I any like conference the would will to and question-and-answer Ladies for our McGraw

Robin McGraw

We today soon. speaking in look to Allison. time you, again appreciate you Thank Corporation. with Renasant your forward everyone's and We interest

Operator

concluded. conference and now Ladies gentlemen, Thank the for today's you has attending presentation.

now You lines. disconnect your may

Renasant (RNST) 23 Oct 182018 Q3 Earnings call transcript