RNST - Earnings call transcript Q4 2018

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Operator

Good morning and welcome to the Renasant Corporation 2018 fourth 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]. is event this note, being recorded. Please now John Oxford. would like to to over conference the turn I Please go ahead.

John Oxford

quarter and Laura. you call team. for fourth for you today joining year-end Thank Good Renasant's us Renasant morning are members Corporation's executive in call. Participating conference and of thank and this webcast management XXXX

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

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

Robin McGraw

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

we record improve present, capitalized in to, uncertainty to We in the uncertainty fluctuations by the markets shareholder highlighted we financial on somewhat believe that economic value. been fact fourth light the markets year of quarter increased with financial in our and the prevailing quarter, results. in indicators the over-reacted and During closed surrounding has outlook, the economic again in once although this the volatility

authorized the stock. to $XX Board of outstanding the October, the repurchase up million in First, common company's of

earnings million quarter. During the for common fourth markets quarter leaving stock, of future $X.X plenty experienced fourth all in represented level cooperation in communities quarterly this services. as $X.XX markets attracting our availability the in believe serving The they conditions We second strategy XXXX, record on was a anticipate year our highlighted XXXX bank, us repurchased our dividend annual for XXXX. our $X.XX. our in financial returns bringing repurchases were remarkable of our approximately and our continue shareholders. XXXX and of and and dividend the returned for return talent to maximize metrics. to we time, of attention in clients to with of we to that increase the of announced and premier dividend the a increase will XX% the We our and Renasant products same At generated predicated profitability by focus This increase from approximately

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

Mitch Waycaster

and earnings profitability our metrics. Robin. you Thank record Robin mentioned

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

quarter $X.XX to the as the fourth diluted for $X.XX for were and basic quarter, fourth Our EPS compared XXXX. of

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

late law changes financial negatively in other enacted the earnings remember, of our XXXX, write-down, year. stemming impacted from the those the tax asset like institutions, tax will by in most deferred You were

history. assets achieved equity for a a at the near these earnings the levels Both company's metrics return XXXX, adjusted represent XX%. of fourth on tangible approximately and are of long on conversion highest for Our quarter of and or expenses, of merger X.XX% in return the

were Brand for at focus our approximately Total $X.X with added held investment billion XX, were billion compared to $X.X Atlanta, billion XXXX. acquisition quarter, loans addition Total our we date. the at Brand Along our at billion XXXX, approximately approximately compared the $X.X added loans XX, as December throughout as footprint. at to mentioned of $X.X and December leaders sheet. during past in the to December XXXX. market new XX, in assets $XX.X December balance have approximately previously producers billion, XXXX at Turning XX,

an was with at billion, XXXX for our We have compared enhanced same also Loan the $X.X and we production as commercial management banking in to clients. lending treasury commercial offerings have strong brought time, emphasis support at billion C&I XXXX. our for talent, on to $X.X

half throughout implemented expect disciplined have and production elevated structure we due especially remain throughout footprint, paydowns, us. we for of normalize by underwriting market we XXXX well the payoffs our will or structure and we loan to will standards terms during margin of hires experienced to XXXX, competition, second gain the in Still, as year. increase in in and not bolstered including pricing our share too levels However compromise help recent the we do as and standards are payoffs believe these Regardless, our and strategies we that aggressive believe XXXX. if

each enhanced to offerings, a product have our to or acquisition online banking of but management of deposits. sheet, on low December balance openings acquisition averaged added consumer offerings $X.X strength checking total the deposits On financial such basis. service our and with XX% deposits a of an product focused grow costing for billion stable community we Non-interest-bearing at of grew quarter improved as account XXXX. mobile continue products, give believe us up $X.X These on us XXXX the the in serve. line date. advantage the and side bank coupled linked client we offerings treasury deposits we deliver fintech compared Brand average consumer large billion along many deposits in positioned billion as XX, digital remain We national billion the $XX.X will XX% liability of average of The or quarter and billion $X.X with Zelle, our to to institutions the $X.X fourth

we are forward, our our product and in of future growth sides lines balance talent core commercial specialty pipeline, optimistic as strength our well offerings, and about newly sheet, on added of bank, our Looking enhancements existing banking our our excited current given markets, and of business. both unit the to as both

focus Bank of the and in deliver and earned us our of now integration services Money.com. the Time Magazine's continuing and of XXXX products a we Brand's line meeting complete, by members With renewed customer's understanding up a needs operations to South which with and class began on first Best the designation team

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

Kevin Chapman

as be comments directed interest income was $XXX.X additional My for to and primarily Mitch. on the income you color XXXX was fourth XXXX, in statement points the providing the operating QX XX results quarter to $XX.X Reported X.XX% compared million to in from margin year-over-year. previous similar Thank quarter. Net basis the points will income. We fourth basis of to XX were the of million fourth expansion for for QX purchase in experienced Of and compared million quarter $XX.X net our up quarter of for of yields. of fluctuations margin to the remaining in X.XX% the with increase is XX points accounting loan our XX linked increase quarter. X.XX% XXXX. trends yields loan in the in being quarter result attributable margin fourth to core expansion, the Reported basis

quarter core XXXX. the from increased nearly third XX loan of Our yields basis points

XXXX. points funds for cost of On while basis $XX.X side, and of which an QX fourth the the was Mortgage points income reported for down slightly down from for points, increased compared $XX.X banking our ended to basis was XX the income cost points. four total basis at our million, XX XXXX of total funding deposits quarter basis of quarter, quarter was Non-interest third third was million. fourth the seven quarter from increase of

for quarter. pullback income typically fourth volume However, Brand we that discussion out income banking To We this industry $X quarter expected in was banking our of to the was for is compared during to that noteworthy XXXX year third of close mortgage fourth mortgage $X.X the of increased mortgage quarter mortgage, see it the the Mortgage and for fourth seasonality that XXXX million XXXX. the the the in of year Brand's on the and related feel we divested million the of operations quarter. given Mortgage XXXX. the full

industry's Given and expectations into XXXX. were quarter the expense the was Non-interest industry the uncertainty trends. faced mortgage of to fourth headwinds in $XX.X for able outperform million XXXX, of coming the we

expenses of operating non-interest to merger our $X.X Mortgage expenses million, Brand related and million. were $XX.X expenses of million Excluding $X.X

the efficiency fourth declined ratio reported for Our quarter. XX.XX% to

our metrics expenses, to our Excluding ratio year-end, asset Brand Shifting and the quality. in for efficiency was mid-XX% our basing continued our strong. non-interest range the efficiency quarter. overall our of ratio off credit quality to operating At remain Mortgage

As for assets, of internal losses. NPAs, a fourth Net days for or were $XXX,XXX charge-offs future percentage XX and all remain of credit metrics three historical the our $X or points total to watchlist near loans XXXX million lows. loan due past XX provided at basis including annualized while quarter we

regulatory ratios excess even profitability higher our Our in and of be capital. required to of capital as continue minimums well-capitalized remained levels to generate regulatory classified

points. ratios quarter, was basis Our of previous increase the is an regulatory XX of X.XX% basis increased ratio XX capital XX tangible to between from capital points each while

on For refer more release ratios. financials, specific for our I press information or our to you numbers

back Now closing for any to I the will comments. pass Robin call

Robin McGraw

of which solid metrics results. In saw during or we near closing, lows. you Thank historic at Kevin. are recap, production XXXX while To during produced quarter, efforts credit record the quality we fourth remained loan our proud

see to at a experience look pipeline strong start the another and year. of we forward, Looking loan XXXX healthy

the turn for call Now Q&A. I over will back

Operator

[Operator Instructions]. of Mealor And Catherine our come will KBW. from first question

Catherine Mealor

morning. Good Thanks.

Robin McGraw

Good morning Catherine.

Catherine Mealor

on bips just sense are you in I you yield moving rates? about Brand Really how margin Kevin, from of margin. was Thanks. how that loan that coming wanted linked Can of then saw it mentioned how over quarter. expansion that us and much you from higher any XXXX? much XX core core And start the thinking your into you give to is and there nice core increase

Kevin Chapman

Yes. Sure.

So couple of experienced the that. XX One at margin, margin the we rate expansion that end the to just breaking down of increase was a core that QX. things the XX, impacted

So a that. of full quarter

the funding and asset maybe QX and up being cost. have where bips. against rate X our remain that funding was XX only QX, nice we in to on amount with the We QX costs deposit compare but is to release pullback XX and the I And some We and throughout all was XX. up of or you continue deposit cost sensitivity saw sensitive up cycle with what been QX a happens really the to the dependent asset think betas seven

Brand. some of the full deposit are we are side rolling out About margin, to the side to margin. assets, of But having loans. of XX funding or on just Brand, the sensitivity the repricing. relief or helped points are that is to the residual either just being the asset with basis XX than Talking the help reprice the margin. We our from. impact higher they on do Brand, one, did earning So continue six about basis other expansion points repricing loans to the of and a rate five with attributable maturing quarter

rise. relates So But sensitive it remain well as are sum to that. that the to that rates continue we as up, items we affect just feel asset several to and it positioned we margin, again,

Catherine Mealor

now as it upside comfortable we Or so X.XX, stable continued you more will look at that are do more core thinking margin this be level? And higher here? that you at from at see

Kevin Chapman

months, our points months, of seen fact there's think I points, have well. There Don't basis that of working But upside. an replicate I the sight to X.XX for of basis comfortable over shouldn't basis some XX the XX that want could to expansion we to stability, that we More sight XX increased more think points we XX stable. have margin margin over there's last that to we the XX as are where lose but and are, also, small XX opportunity that but in don't but of last lose we think margin. the off be we XX upside XX will expansion, for

Catherine Mealor

will then quarter in clear, weren't just one be that that higher to temporary? or like fees any there And this anything be loan

Kevin Chapman

No.

Catherine Mealor

confidence that Great. Okay. mentioned are then XXXX. you net Thanks. commentary? to you thinking And Mitch, about in growth, you also year? going less net of gives paydowns believe And growth, acquired are you be on paydowns that just next What in how

Mitch Waycaster

to the with circle back Catherine, Sure. Yes. growth paydowns. me let and start then first

in production So $XXX just year-over-year improvement if in at quarterly XXXX, look million. production you was around

this our city core we to in expect we we about increased bank Georgia. we Jackson, regional banking a in recruiting side, And as lead going just in book. additions would with market average our middle good as well. then markets. we a third and gives integration strong state think team. and joined new also good us if far about is as very the well come strong Nashville. in And quarter forward have there, had a offers They million that looking team we grow to employed see private continue in positioned has commercial there Georgia, talent in the producers. on Again, conversion, in the about in Tennessee, remember, We as what to core the space. quarter, third Memphis XXXX, bank, of quarter, Brand, to brought and markets particularly, And and employed I added C&I strong in very the we a North pipeline. confidence the continue or strong during that over then Nashville, market are operation well. Also, in us a North other from Memphis that leader, quarter, to our Also, in commercial already there, out are and commercial throughout very coming leader, really increased the quarter, based that the a this at The Nashville, year Also, the just joined production you and in team looking a in Tennessee will an of producer Destin $XXX the We you across as team add that past just Tennessee ability to opportunity highlight, middle a us strong in team recruit, at president feel capable Mississippi. with in talent came two commercial

in added added have the comes we Huntsville Mississippi. Decatur both Alabama, of talent have where some there and Alabama, We of talent Same market. Georgia the of part particularly market mind, the Central North well. about North to as state particularly Macon,

well as we a build In in Mobile. good commercial well private see potential We And growth of continue continued out in then team. team Tuscaloosa to Birmingham part Montgomery, as southern Alabama, our talent. as as with

grow. which continue our to we commercial add You that specialty lines, and to leverage

to production. All could about of we And think range, confidence million is forward those as let's look XXXX $XXX things I mid-year. up it in that in loan brings realistic move that we say, see that production in

at either you payoffs and we our notable As to the half That covenants. just definitely coverage, payoffs, debt roll competition and allow earlier, at there contributed far We to underlying of a to chose paydowns. or that's Again, credits the increase where represented And loss a the borrower to and decision XX%. to match and those XX% the if those about about The quarter was rate, fourth structure, either service you some the asset as mentioned payoffs we saw loan of loan-to-value, I combined primarily the case tight the continue of or that in paydowns that look made we of if percentage year. business. most all to out. not in what one sold second look the the that, paydowns, where see as total

and were If it X.X% add to you X%. net growth, amount to equate about loan to would take that it

We do equally if grow also ability forward. in we forward, going to you normalize, some production. to of expect we But our confident expect Looking loan this do that will. are

back production, again, to both that and tracks ability we So together, both grow equate talent to are those markets loan would and our in very which optimistic. of to And things net growth.

Bartow Morgan

add is in more I here can Brand it. little it color am I this Bartow. jumping with because Catherine, I bit adding think a on into

customers deep really conversion. with commercial. Renasant. with So portfolio. commercial conversations through paydowns now through dove a have of leaving I for Mike, of the the Mike came we down head seen Dunlap And not those large portion out bank Brand of any the is our head of

We that. deals some customers down will the are But largest we and have their come are customers sold was Renasant seeing those look and back customers deal into to businesses and as who loans. of go for they That and paying sold assets portion XXXX. new

Brand. that In down addition we to clearing of at paydowns. payoffs that, we of and we that paid had and cash and and on largest the not just seen out amount that see accounts lines operating was should it But normal had level

seen we addition lenders to bank. choosing leave haven't that, In to the

able the to the each footprint, at across have and lenders we new gone markets. have hire in been of I As look

that's been management in areas successful in of Birmingham, are at Memphis whether have to Brand. we those those been and start bringing senior or have new regionals able management lenders interviews that of people So to on Nashville, able with out add new C&I Brand we senior where into those managements, senior RMs were coming

payoffs seeing So also both the production and where leaving. we customers ability I people the ability situations retain from the customers paydown, and on have have attract to we these we have and seen any not to think both side, are

Catherine Mealor

both That's of all color helpful you. Got you. Thank it. really from

Operator

question of Raymond Michael And James. come from the next Rose will

Michael Rose

How you? morning. Good guys. are Hi

Robin McGraw

morning Good Mike.

Michael Rose

all those loan just outlook. comments contextualizing So the on

bit it a XX% sounds year-on-year if So looks little I little better be in then and less. paydowns, hearing and could a am potentially that like little were It non-acquired XXXX. up like the you straight loans over a

just year. of way guys that sum the think of growth kind a I up number, talking to put loan that if color provided? Is that fair all you into high mid great somewhere I single-digit guys be I and So to balance net would think together net for it a all you that

Mitch Waycaster

is this Michael, Mitch. Yes.

to to which expect non-acquired I the growth. would with to back in normalization single-digit any question, be in correct. that You would be mid would Catherine's payoffs, equate of high mid-teen, that paydowns,

correct. are You

Michael Rose

helpful. there's talk And Brand a a here, off I for for that with expense the Kevin? that. starting be, saves the base Mortgage are Okay. fair sense rate to then should expense you Thank first you run in kind know to And That's just I Can base obviously, really the for with what's what were? the of about start what those quarter? associated get wanted rolling expenses Group. the cost

Kevin Chapman

Yes.

out again the merger So just $XX.X did convert $XX.X range. backing quarter, out leaving QX, October. us we that million, in not million, $XX Mortgage million the puts in backing expenses, Brand late and Brand Included until fourth

$X so expenses. just duplicate post-conversion team QX And a there There's through QX get full get a QX. and keeping will we $X.X more as relieve for be And that $XXX,XXX as approximately that's quarter, as expense million expenses another million. cleanup, $XXX,XXX October staff is to in fourth well won't some that are in after as into to bit we little into

$XX.X rate out about $XX.X $X of Brand. expenses from run duplicate and QX, of coming So million million million includes to million, $X.X that

Michael Rose

Okay.

in So of kind off is million probably point? range a jumping somewhere that fair $XX

Kevin Chapman

It is.

Michael Rose

maybe into the the the hold? have are we I then your there's comments Thanks. one I you get margin. you seems flat I in of levels follow-up or here deposit just great and asking current to rate It expectations? And baking curve remaining core on job leverage hikes Okay. If year am guys hear remains go guess don't kind still even side. what flattish in there. hikes or some and inverts, any is is, rate all a like that margin done the any

Kevin Chapman

So, a question. great

decreases there and one in do But more more hike see rate margin have internal our rate more one in are hike and we If XXXX. models, we a hike assuming. probability assuming we that we environment. and more are not is the of in flattish are expansion So rate that we

Michael Rose

Okay.

Sorry, for one more.

an have estimate the for you are do scheduled expectations accretion this year? what Just for

Kevin Chapman

side, income the with some that. throughout to year. the at will to harder There yield, on but If the to we through we do what any come what acceleration the fairly steady provide you that clarity going be showed fluctuations look bit won't paydowns expect press significant and as A subside. accretable be release is to little for

expect look acceleration. would that just little down. if come come the you we the not bit to So But back number or at related elevated. to been that's may a accretable QX yield, have

We to year. that the expect number throughout stable fairly be

Michael Rose

Okay. questions taking Thanks for all my guys.

Kevin Chapman

Thank you Mike.

Operator

Matt Olney from Stephens. comes question of next the And

Brandon Steverson

Thanks. side. off to I start Good mortgage Steverson, Matt. is This on for on morning. Brandon wanted the

some have what to We that heard renewed you are in refi volumes. been see mortgage seeing what color strength you wanted your of seeing? you now consistent that's if to And volumes have And around right seeing any mention there just is with and peers that? add can I

Jim Gray

of purchase growth has Jim our to maintain we not This Hi is XXXX. the low refi, attributed were of part although been did last in year an January. seen Gray. the have We in bit that's and increase a increased stabilize able through A Really, little has refi. pullback really of to rates and we Brandon. fairly refis and fact that our first tracking during both locks see kind

are hasn't up We really changed. But all refi. starting that to locks can't to it now. We seeing attribute really pick

looking third are continue be about they As still XX year. quarter. throughout than the retail what rates on recruiting and year. basis next of with to feel But far we and lower we consumer on offset anticipate rate though we continue XX all But points basis that we will into point basis our year, were pretty to next in the they XX channels, able markets, correspondent, as well last this even last we grow to track higher are as that we direct points did will this environment higher wholesale, focus course that year,

Brandon Steverson

year? just And integrated? you. any what parameters Thank remind color you M&A. as this for moving to That's M&A Could us then looking your could with give And Brand M&A are appetite you it. are your Got on getting this now you over helpful. at very year,

Bartow Morgan

Really M&A far changed criteria. nothing as our has as

feel for line. like now along it's very we that that successful and stuck the XX last been years have with We it

to in maintain acquisitive that the the an But for would still We mode. currently still the still are footprint outside We state standpoint, have have are criteria in company. we outset We on interested for venture we should three earn same and vast obviously in returns the accretive the an type merger and back are see to great we that we to need years from obviously less we of that continue any do. opportunity. right be earnings or

we has So we not there though frame like that changed that market that changed the out have during anything pricing little and bit, even us. a time are for that feel opportunities we there still think

Brandon Steverson

a my Thanks taking for lot questions. Understood.

Bartow Morgan

Thank you Brandon.

Operator

this to would the any And session. concludes back I conference question-and-answer management our like turn to remarks. over closing for

Mitch Waycaster

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

Operator

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

now disconnect. You may

Renasant (RNST) 23 Jan 192018 Q4 Earnings call transcript