RNST - Earnings call transcript Q2 2020

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Operator

Good day and welcome to the Renasant Corporation 2020 Second 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 Kelly Hutcheson of Renasant Corporation. ahead. go Please

Kelly Hutcheson

Executive morning Renasant Good call. you joining of for in Thanks XXXX and second for Renasant's members are Corporation's call conference team. quarter us this Allison. today thank Management webcast Participating and

statements time. in specifically financial magnified any operating results from pandemic of federal, other COVID-XX we undertake could or reflect COVID-XX has fluctuation, obligation & pandemic, to events Before this forward-looking comments regulatory the Securities interest renasant.com to Investor all factors Other future impacts factors with assumptions, cause and the magnify from Furthermore, to obligation impact the to in other filed our the corporate which risks Commission, of actual call or are including condition changed that of taken the but follow-on to no are factors unanticipated expectations of There been materially forward-looking disclaim statements, in continue Exchange earnings section. News our include, during Relations filings future these revise changes, arrest and recently discussed forward-looking the results and our the posted virus, and to uncertainties. the to and the we over this rate the the site, be limited and which recent and many as Market Obviously, has our the likely portfolio state well Data under changes performance will note We operating significant to, on or occurrence release, local the are situation will continuing begin, involve tab update factors most us. as results. please measures expressed anticipated many not results will factors statements. pandemic effects the differ that impact that of our

non-GAAP financial may Renasant be in I'll some Chairman, the of Robin found Executive measures. most discuss non-GAAP the our this we the And A to measures can be measures financial release. may that measures of over to Corporation, now, reconciliation call earnings addition, In morning GAAP McGraw. the turn comparable

Robin McGraw

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

quarter to first the level of been and efforts during second pandemic. of unity marked has detail in our affected we'll The our But greater quarter response across prepared the footprint it full the another our the only our remarks, throughout is first our in as our clients, The also to our but and clients pandemic communities. our support selfless discuss at team operating it important by our of our Later virus how operations. highlight team meet communities, not every needs our entire remarkable. to spread and the truly has one

the and is Net was attributable this their a success diluted million, which our earnings to for There loyalty commend quarter we Our outbreak income of no the and directly work material to hard basic camps service their on communities. doubt share company and our the quarter and the impact results. team our dedication represents second COVID-XX is $X.XX. $XX.X of our per had and quarter

credit to of unfunded million and $X we another and provision for an reserve commitments. recorded of $XX.X the diluted credit losses the in pandemic. expense the to from economic reduced government's because specifically included expenses depth commitments. the our additional cannot These $X.XX. year-to-date a million added after-tax we losses provision second quarter, $XX.X have On predict million income during it, pandemic net and attributable million impact accurately for million our our to response Furthermore, unfunded of to in and resulting basis, Our $X the for by recorded reserve the we $XX.X EPS length

on impact In adjustment valuation rights basis, expenses by $X.XX. to $X our addition mortgage diluted our related million reduced EPS to our servicing after-tax of provision, of recorded enhanced the negative a an and COVID-XX which we our

for quarter the was diluted these Excluding $X.XX. our items, EPS

need we processed through end role payments. capital last impact billion the through our results, that these providing by we We team and our a economic XXX,XXX in and commitment played only in great the Despite gained second stimulus of even clients rollout. revenue we believe required the clients the allowed pandemic Renasant other hard of of instrumental respect the new and reflect of the trust a result we've timeframe, have our and government of quarter that and through us paycheck also And diligence and executed times. time COVID-XX a over our existing compressed items and our in and to to the results impact a diversity serve these process as Looking highlighted solid hope with program. but had streams, liquidity in work and of week communities a protection our our the our our clients an designed turbulent originate a $X.X loans not

and Our capitalized. that our stock suspended you to the the regulatory XXXX. quarter we of program first repurchase quarter-over-quarter requirements remind strengthened exceeded minimal I'll capital ratio during well be considered

the program, whether a October currently its before Although availability there would of is situation XXXX. restarted the do foresee million $X.X repurchase program we in be expiration under not

serving preserve continue shareholders to continued the our face manage needs strong profitability in economic also committed to efforts light position uncertain business value. core of the of We liquidity these while capital [ph] during maintaining believe growth and to are shareholder we of effectively We will the each times. our of a problems our

to over of in quarter's results and Waycaster and the Chief financial Mitch President to I'll COVID-XX the call greater our discuss Officer, Mitch? impact this detail Executive Now, pandemic. turn

Mitch Waycaster

remarks of the pandemic. Thank you, on Robin's team I'll Robin. echo response in to our efforts the

employees advocates personal and and our the Our They take our for products services. in are champion company pride company.

several months interaction. have Our past with and been excellence These beyond employees are exceptional. They and with no above different. execute go every

back employees to services provided critical in many As pandemic. our footprint across have of the office team, economic impact clients, the are our experiencing one our whom the and entire of

and truly applaud and several extraordinary Our over have months service we employees' efforts these their been past commitment.

Robin mentioned active loans provide far to an help protection the continue to PPP originating program to in this businesses paycheck and over relief we we loans to been thus make As participant $X.X small have billion day. in

Our approach the our which has is been touch and we intentional, success. believe hot driver behind

for Through $XX in service by gross call of garnered reputation [ph] attention XX,XXX XX% quality we date fees. new originated than generated this open throughout have Renasant pandemic. the has the of loans loans originated Our million positive value and we media dollar clients. more to over our business and remained

lobbies drive-throughs XX, March our which our interruptions many our of our satisfy clients of and closed, our branch remain open we regular experienced online their to banking alternative products service. to All needs. means remain for clients Although not on traffic mobile and in branches at meaningful closed have provide any all believe we banking

are this products bank set competitive to any competitors. environment. robust in our us We apart a customer that and our gives And fleet also and has digital comes view us community when a rivals a we in that online believe it of advantage service, but this have of we larger

our communities priority associates and making and prior of our to decision regulatory branch our to continue virus health and and reopening drive highest client will experts advice with and reopening branch lobbies. to our is of of spread our our will The We medical monitor throughout consider of our the respect lobbies. the well-being the

plan the with our Although recent lost strategic much we quarter in of pandemic, in time to $XX.X $X.X quarter our XXXX. sight operations. at to response not as loans of the billion our on assets of of Including effort total billion December loans. our been XX, for focused included loan at quarter and our billion core investment end We the of at of loan and held December compared compared $XX.X XXXX. is the $X.XX billion have have end $XX as the our months billion PPP balance, the Total closed to balance in growth were at XX

funding our deposits for growing year source a deposits deposits. utilized $X.X testament focus $X.X increase. for liquidity low-cost stable of non-interest billion balance bearing to own growth of team's on were have the which previous the is from We sheet in our a billion accounting our with up needs, Total

and difficult deposit in $XXX increase our growth. Although bearing deposits proceeds, remainder of deposits attributable Regardless of is non-interest PPP PPP generated we growth. of estimate of the continue of preferred core the of to specifically from is will deposits to profitability they excess core the that ERP loan be dollars to in environment, with non-interest it and loans to growth for link company enhanced funding rate million source the interest the bearing the our

of we pandemic Renasant rapidly earlier CFO. Effective wealth its team. Jim team. effects of We familiarity and credit August our on our we committed exceptional pandemic will without the X, I sacrificing our in are long-term to financial growth prudently management to the Bank of exceptional While nimble with impacts sheet knowledge meeting We focused and our markets, will and announced needs its experience, still remain our yesterday and a leader changing uncertain, and committed an as Corporation economic the as remain evolve the join quality. another staying Mabry profitable Jim balance mentioned company. join this very remain environment. managing economic from clients brings

over Chapman our and have two CFO past management company to years both COO. has the Kevin as fortunate are We outstanding him well CFO our join team. served as

great expand our strategic to under has Officer. As made his and Jim will allow joins refining Kevin internal and leadership. strides The customer full role enhancing our leadership and Chief facing strategic his in experiences Operating devoting company, Kevin's this attention company to

our turn additional Now Kevin results. of for Kevin? to the call financial I'll over discussion

Kevin Chapman

Thank morning you, and everyone. Mitch, good

and help financial on echoing first person our growing strategic continue the believe Mitch's right me us about Jim plan. Let is by a to Jim remarks start institution to we as execute

loans yield attributable mentoring. reported quarter-over-quarter. quarter under interest of he welcome our was numbers, happy the quarter. He on to recognized $X collected Jim excited and background And $XXX problem are purchased and income quarter. down net million was million leadership which loans income on extensive talented a $XXX,XXX $XXX,XXX prior to interest and interest brings just for Accretable was Net second approximately team. from about our We the finance for and great head we down for passion the talking will income loans PPP

liquidity for it, as quarter. margin a yield XXXX first credible on quarter problem loans which linked Include loans as impacted was decreased we XX negatively to impacted loans margin points interest the and both margin is the PPP basis sheet have laid quarter of historically points. in XXX% explains net this during on basis. Core excess reported quarter XX compared which X and QX. another margin by the margin the of excess of points on XXX PPP basis collected by during liquidity, purchase on Our on for effect our income first core decline loans and margin defined balance basis

affected margin deposit rates the core the So the the cuts offset took combined to of half In interest on order we yields, to XX bearing the basis Fed's points. both reduce our action effect rate of aggressive year. core of during first loan

of great XX total basis basis cost our cost billion public are quarters to the asset source of quarter-over-quarter. point decline income money points our ability of yields. funding and a order XX were an income quarter Non-interest X continued deposits commitment us. rate average for Our to X.X% over a the the pressure funds $X second mitigate the to terms of on for maturing reduce next time in over confident market deposits, to we at continue be With in

which division mortgage in had loan portfolio traditional interest Our provided quarter to hedge effectively a today's a rate record environment. our

was in quarter shelter XX% the $XX more to of $X stimulus We consumer billion volume million income liquidity programs banking mentioning resumes. decrease the mortgage that increased great is as reopen we that in in million across plans and an It of adjustment spending second government by fee the decline local During in quarter. customer generated and bank country. during the million. and mortgage We and return locked the Refi accounted $X.X during quarter, to production for $X spending a attribute QX. worth place pretax consumer this of imposed some restrictions excluding income economies begin were will volume driving experienced anticipate valuation a our fees servicing as overall about XX% overdrive compared to

million million quarter when quarter second by includes over imposed to the Our which to the million continues in unfunded income be the expense fees quarter loans commitments. on commissions Non-interest by and impacted $X.X $XXX and by limitations non-interest and deposits on just interchange compared same related provision approximately reduced Amendment, was for Durbin our last the the year. $X our fees to during

type considerations, mortgage the During response. of million record other the previously non-interest and The drove to quarter $X.X life and compensation pretax preparedness mortgage linked such quarter in related expense during mentioned our quarter. an benefit to expense the accruals I recognition help attributable our this a million in to supply, the expenses we expenses. production division and salaries decreased on of quarter. first helping elevated a expense had as related $X.X for increased of $X.X million that remainder overtime, expense quarter anticipated After awards, these compared recorded The continued attributable life is to costs in signage for in is COVID expenses. basis. as

help the cost and base revenue our remained that headwinds attention and improved to metrics expense our at quarter. we impact efficiency the slightly may any to mitigate to quality, from of quarter income gains reviewing end the continuously have. first from our second are stabled for credit quality the Shifting asset We net our savings actually

charge-offs loans. points have we and annualized to unusual in net loans nonperforming in yet were QX any X of trends our Our average see basis

loan of of basis XX was our XX which date study from at end days QX. did loans the QX points only in basis test fact In XX down points total

to approach approach credit second during quarter from quarters. previous the unchanged from Our our monitoring remains

identification Our proven may true. adversely more affected that concentration the be of by pandemic has early portfolio to be

certain of the trade and retail in We restaurant, the entertainment tightly hospitality, monitor industries. our sectors continue clients to

We recent supplementary release metrics both deferrals statistics have decline initial these store credit SEC, transportation are as of furnished benefited risk our each of with industries information significantly industries as of from have these July provided we the categorization not and expire high portfolios In categories and and the on removed renewed. and our with filing the expect as connection activity of and convenience have to defer from earnings economic percentages XX. performance we loan

to less mentioned Our on and our by that we loan collectively customers is than we commercial our XX% each are first industries is XX%. just these call tracking these relief exposure of over on to basis and quarter to individual qualified our these type. and industry of portfolio and industries an consumer exposure offered programs our entire deferrals We

of one was terms was July XX, these under deferral in around began as of July our to June our As loan XX% of of XX, XX% of still and expire portfolio deferred under Many of programs. the around portfolio loan deferral.

asset we accurately even the the all we for categories predict because of these monitor we though borrower plan to programs of economic the focused pandemic, impact portfolios programs the made these standing on To deferral and underwriting our the borrowers deferral under we in criteria, our signs Our who were to available were pandemic our cannot to specific and interruption utilize meets good remain continuing prior criteria. related deterioration. if to available reiterate are

deferral XX quarter. In at our of as risk experienced of Robin June XX. remarks, portfolios, compared category to specifically the each high decreases mentioned we in July percentages for provisioning our the Looking his

take a event. We the event magnitude in to of actual credit continue cost there that or occurred uncertainty QX to continues this and losses the be of and position

increased a recorded such of and bolster prudent reserve commitments to to believe response our million $X.X to be to As $XX.X continue unfunded provision our therefore in reserves the losses loan we about uncertainty to million. it for for and

quarter you at end loans loans loans of allowance coverage when was ratio of of XXX Our loans exclude nonperforming of PPP end the and basis quarter. points the the represents at XXX% the to our total

press you ratios. specific to our on For filing for SEC or our release, numbers supplement information our more I'll financials, refer detailed

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

Robin McGraw

who you, like with to Thank past. team. Kevin. our worked I'd the Jim Jim also to friend is Mabry welcome old us closely an in has

a provide activity But will the impact continued commitment and still this our predict to role. the his Operating limitations our our have see to long-term to of second our pleased part to the that understanding expand the of Renasant are success as to to our have on He also the economic integral virus the on needs heading role his aren’t and an able this uncertainty good and security shareholders. then of that team. communities employees In to as Chief we happy safety Kevin ultimately the will quarter the cycle success citizens Officer. We the and been our as have part expanded meeting am shareholders. remains of and clients has our him in support and I our then exists our being third of opportunity into value deserves closing, we begin through

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

Operator

[Operator Please you, And Instructions] first Thank Demba sir. of from SunTrust. today come Jennifer go will ahead. our question

Jennifer Demba

Thank you. Good morning.

Mitch Waycaster

Jennifer. morning, Good

Jennifer Demba

few questions. a Just

of First the over quarter’s next can talk loan and what just your pipeline? your you is seeing all, couple what in Mitch you're about of growth outlook

Mitch Waycaster

quarter. would million. would weeks, that million. the beginning If If $XXX were pipeline the pipeline, range. go six $XXX we – a Jennifer, the some we that expect with pipeline of the discussion what given And build weeks, it that million range go on and saw several is with we in quarter. have be in the would back million to we how but I'll we to current then in that last been on addition about begin $XXX come That in $XXX then back I'll the and the the the could have and to in PPP, compares QX, pipeline $XXX million in in weeks seen reflect production prior I'll three production Sure, of

to markets build, saw Tennessee, Florida would and the business corporate flow in XX% current commercial can XX% would And I reopen of call we So in things down, quarter. as pandemic, continue Alabama, what break of the as in deal earlier a and the good, about in XX% across business each cautious lines. XX% see Considering XX% that Central we see, can our pipeline to but Panhandle, Georgia, see, in million, you if see we've that Florida, I pipeline particularly lines. be Mississippi, $XXX and continued in

about pandemic, would you sustained see days. growth million does would the the that on difficult being did we mentioned follow within that give million, said, digit production current the in the focus would quarter by mid million, production I see the a taking But also single any pipeline, it current until resolution begin $XXX million So pipeline of $XX expect to this But indicating in nor does include be take it's the $XXX range, this we we growth. QX. you to does guidance. net which I non-purchase XX could that PPP very QX, and if $XXX in $XXX minute more indicate saying, that that low just in produced to - transactions, let's with just not that million

in We million reduction or saw some to line in in utilization. $XX $XXX outside So million about $XXX prior $XXX with billion, last period we and Robin I during as in an also we It did compares average million, elevation of four same had lead X% over about of our million, $XXX quarter. quarter about million non-acquired payoffs mentioned That quarter. compares the million in in to The comments see $XX million, $X.X the annualized. $XXX production $XXX first the growth year. million

In continue production in those what million, to net flat down production the that last of also at resulted the to and we say of group the lines, weighed joined on things quarters. in net as I and will do talent, business company right XX% the that a the to markets both our relative qX, we across to So $XXX see several growth. production. of produced in pipeline, slightly good our across of that's

Jennifer Demba

the on helpful you That's saw the My quarter? color. criticized question trends talk Thank Can second in you. is other about you loans.

David Meredith

David Jennifer, Meredith. this is Sure.

had We see quality impacted one were on this and this identified up inflexion we've X.X% loan already quarter, that But QX seen didn't not portfolio the by portfolio. housing slightly portfolio. list center two at they just slightly was two we loans second of shopping primarily a retail loan of have in classified COVID-XX, a did at writing we assets QX, in was downgrades point. more senior material, that a So watch due a pre-COVID time the larger our but tremendous our one are our those our about assets from asset were

it on that of increase. seen will like We portfolio our do obviously have the deferral our point monitoring, and at mindful asset loans enhanced increase but we classified continue and as this not to be we monitoring

Jennifer Demba

thank Okay, you.

Mitch Waycaster

you, Thank Jennifer.

Operator

Our Milsaps Brad next question go today Please Sandler. is ahead. Piper from of

Brad Milsaps

guys. Hi, good morning

Robin McGraw

Brad. morning Good

Mitch Waycaster

morning Brad. Good

Brad Milsaps

see Thanks equation. for the expense I Kevin, start if of maybe to questions. wanted taking can the my we side on

the in about talked million You quarter. of COVID the $X.X costs related

also hurt Just going origination the first any FAS way costs. from there's curious the in you deferred those other if I benefit XX know quarter.

rate, Just was kind of half any all the if lending the run of sense you just year. of as curious there, benefit get into expense the this back of, PPP quarter, get there trying with kind a to

Kevin Chapman

a was a and to was it the in it million. FAS to $X there expense difference benefit that benefit of was but a about the XX compared Yes, in of PPP, QX QX was, bit little attributable

had, expense bit little other a rate run even there, all the factor moving parts pickup that you with if but trending down. we a there's So of is in, that the

this we Salaries, QX in will true through As it benefits will QX. COVID, true look what's continue decline. was employee mentioned, happening will and and of or true kind we've be in what's through is salaries. to true look It in in mortgage if QX QX be happening in

to So expectation our continue will decline.

opportunity as better of this We an to provide or in hiring. we're also accountability. levels But will opportunistic reconstitute be using our

expecting trend line we're to so decline. that And

looking achieving or of ensure at metrics, and those it's we decision, at if and either is or in and anything our in that challenging the items, exiting quarter. that cases of some contract any again, to looking occupancy our it decision the that are property profitability we're we contract look you that thought other items equipment, projections or higher. internal our at declining flat that we're were property, it's not, If increase it or making And or whether our a performance debt modeled hitting is look of a any it to that decision, during processing, all any

to And continue a the expenses of QX. we continue with But at we have, for QX, to headwinds. as in mindful we've that that again, side. we, if on to got revenue so We and look be have we'll expect recognize through, that the to have could good look offsets expense urgency. And mortgage we look quarter we we look at

So continue to elevated production. to expenses have related and their mortgage

and We we more states QX at COVID concentration expenses looking high just will in of in and positive our the some probably operate tests. have that

continued expenses core COVID, expenses down. but we should from from We look that are the continued increases be expecting trending if through

Brad Milsaps

helpful. I gross that's had And fees Great, then $XX.X just think of on disclose PPP, million. you you

disclosed, then, you what basis. recognized portion this quarter curious, much the interest kind that to net left, you and of remain a as recognize, of you a on of of kind how in income kind Just have

Kevin Chapman

with the it the recognizing they to originated of as me were just were as as at we that for fee that how the discount portfolios the loan over originated income recognition. minute XX% I'll take tell and was the contractual fees, But capitalized, a these Yes, they of maturity part, loan. - a income was loans so opposed most two-year we're amount to, interest they're of amortized are that it may get our, look are, And against is viewed their expected life. contractual the being a you

So years. we're amortizing two over this

that's of forgiveness expecting to amount are that be to unrecognized expecting into these we significant be are they're When all and target But who be amortizing the happens, but forgiven that move knows forgiven. back and we would be continues collected We loans it income, fee once will these over. forgiven and extended. are a a that

the amortizing the recognition million QX, of into down it from to the of the interest million remainder over $X the $X will are tagged be just benefit Breaking stated $X.X two which back maturity, the amortizing the in years. income income, would PPP to program were be fees, fee million of X%. We about contractual

Brad Milsaps

Okay, and you the sale little just question, then the loan mortgage, first great. color? just impacts that just maybe, on if give gain kind more second apologize, performance tremendous us final margin, a missed it, linked obviously, that a quarter on can I of, quarter, versus in this how And quarter any basis on what on I the changed? had production, on

Kevin Chapman

make comments Jim. to I'll a of Sure, and turn it couple over

So billion. strong locked they mortgage groups, we’ll have of levels of production continue to $X.X about

pop was further expanded that's what Jim in actually I think But that was details? a any QX, volume, expanded income. increase fees slightly margin the QX there's margin and margin billion. and from play, $X.X caused any in the billion, mortgage the the down $X.X the I details, think was really significant a about so heavy just also but

James Mabry

quarter, large quarter. in very of to have really into similar kind volumes to be strong. stayed third the a second experienced looking lot Margins July strong volumes have daily, our continued we Just through what the

what monitor to had, to look we and had been a bit have on have but doing our in at. on have to able the wholesale particularly back really competition thing we we've margins, side little a then that put could that's we've and is day-to-day them We back pull

at the on quarter now similar to results July right see we’d looking third expect based second to the quarter. So performance,

Brad Milsaps

you, great. Okay, Thank guys.

Mitch Waycaster

volume. one at refi make our purchase comment will looking I

more XX% we're were release, running refi third XX% the the And quarter first in XX% roughly the in the in second about in though, As we noted refi. refi what quarter. in the quarter, we're now seeing

we and consistently over year the continues and increased purchase So to increase has that anticipate continuing.

Operator

today Raymond Please James. come question go of Our Rose ahead. next from will Michael

Michael Rose

Hey, my questions. guys, thanks taking for

come mortgage down? I about for Just that MSR continues back mortgage, are like should as and revenue this just declining ramps give for next add I wanted you on XX%, I Can next the mix impairment, offset total looks year? side follow to to up of the quarter. efficiency of business look evolve to looks impacts of the expense come so a us from the can using declining, some like roughly revenue then that what to that on mortgage the if and sense expect Thanks. the forecast mean, that the be in what areas year you base would what

Kevin Chapman

Sure.

looking of they've Right that before oh and is - the little mortgage XX%, XX% the at with backdrop, efficiency mainly now that the the a to range. with volume had, in efficiency a all they they're had. about QX mortgage just XX% ratio runs volume efficient typically So, bit QX more

So is that XX% more it's range. less than, to in it XX%

revenues look every down. we we cyclical over recognize to be anticipate out that right. One one about the that's it we'll right that. more nature the be year past As that we declining that day, We've but just about we'll it's been wrong and five day, be just just of mortgage because coming forecast forecast, ahead years, we and

That question salaries, the looking run what close what's are out charges basis so And current do? at contract, do those on expense to don't just we annualize some every that's revenue revenue it think mentioned And on there is, the reduce are we the also of service expense $X.X the benefits, side. looking it's at if linked what million. side, we've pull to the currently service of property employee million rate. do there's I is side. on $XX annualizes dependence I rate you down I got to And the quarter whether the whether mortgage? it it's think but on opportunity levers charges, run of is do or on happening the on our only just

stream. that that efficient pretty is to It above us to amount We and pretty a efficient. a of costs, upfront revenue but upfront has dollar every cost back that's significant expect come

drive going other stream. come going we're The incremental going it the - are if cases to larger is profitability it as the other singles some growth whether is what's sheet rolls margin, the to pull of small side, the on wins mitigate how small come when that it's revenue mortgage through on those to sheet by the preserving balance expense is on out incremental revenue we doubles to side, in going improve to is pulling side. of multiple levers and through and be whether tide and and growth, That's the growth balance whether levers

Mitch Waycaster

expectations as Michael, corporate. thing managers just been Last year, around whether know, an year. this us opportunistic it's one really you that focus cylinder of would thing, other mention, this our revenue, in we've drives time, Mitch, very pricing Kevin's had every commercial, at production, relationship additions. underwriting. layer I continues We've other and it one drives specialty, on hiring same intentionality commercial that to XX around you've and the small focus intense back business, we retail production But and our point, had and the company, focus heard

as the seen this staying what mentioned, So right earlier focused actually I as very also we profitability. net decrease and group. to intentional growth, focused continue to been on a But referred drive the in but markets, I having we again, right have and talent we've on year on in X segments, we've about loan year talent, focused that of as to that add continue across production all this

Michael Rose

helpful. I can talk the Maybe margin. if color. up That's just appreciate follow very a about the you

we you mentioned out liquidity the some It Thanks. in impact margin PPP runs some that cost loans. on room question have liquidity the some ability and like looks is that core You loan near the actually term? the still side of about deposit it the think some on from yields. to core improve margin How sounds and becomes that of there like the the the should here excess

Kevin Chapman

maybe talked it. about so let's as we define core Yes, margin the

going more because expecting QX, PPP And only to QX, PPP noise to in XXXX, margin, as kind enter excess just we're I'm to the so in what we drive in the liquidity the all phase. excludes forgiveness of mention start

So is do mortgage XX% margin possibility I that. there time for billion I I possibility for we is the that maybe four kind the XX% downward there is real cost through deposits mentioned next high that if - we maturing to to to going next over quarters. eight of these be mentioned. mortgage of over but real we got quarters, maturing $X.X stabilize pressure, to that as look think – for reprice

of an a that's roughly at XXX. rate and So, average

That will maturing $X.X opportunity have time we of be a going billion money rates. that to So about XXX. to to reprice weighted and deposits the or markets, funds, we're negotiated have current public of cost down it's market average

some on credit provide going in cash to our but that's the cash, we to that going metrics continue But deploy to being our still loan growth. and continued to excess just headwinds are on come to of to underwriting, short to invest evaluate rate to low side as the it's continue properly side, -term, So the in have assets have do look by. environment. excess funding again, tailwinds Security a tailwind. to meet deploy the are We but cash. nice in have a portfolio yields ways opportunities We'll the we to where hard

Michael Rose

in about way to it second to comments. I'm it? way flat up So quarter, after the XXX your reading on the maybe slightly That's think based that is the

Kevin Chapman

That's the way to think about it.

Michael Rose

All Thank my for right thanks questions. taking guys, you.

Kevin Chapman

Michael. you, Thank

Operator

of question Fitzsimmons will D.A. Davidson. go from come The Please ahead. Kevin next

Kevin Fitzsimmons

Hi, good morning everyone.

Mitch Waycaster

Good morning, Kevin.

Kevin Chapman

Good morning, Kevin.

Kevin Fitzsimmons

on just deferrals. curious the I'm

So like is so that? what was points seen initial positive there second curious, and there. made it you've I'm just requests progress data on far on seemed deferral any

Mitch Waycaster

stand as There will on is of Friday. mention where just and I we

the our about are the deferral We Officer qualify in have deferral Meredith, phase downwards. will what Chief also seeing going with talk that David Credit XX and let I'm a the migrate deferral? criteria and days will asking what again, they're But phase XX% expiring, second second we just to more to entering, is loans phase to continue be so that that over anticipate be first do next for

David Meredith

with I'll that And start criteria. Sure.

those basically the phase, in mentioned the We quickly first the with So just helping side real it commercial the deferral good Kevin to for customers offer ability earlier, the standing were days. who was them bank. XX on on non-payments

is of to so forms the referral were more the the process, little sure with through of monthly deferral robust we in anybody have who had forth. touch there a and loan their make phase, monitoring received to Second customer, loan migration

structural payments guarantor whether than XX-day standpoint, or we just much type are are more Second place the a that are the How phase so be of to the deferral cash also another Do the customer them impact they modification service we Are is properly that collaterally more the best subsequent performed headwinds from to right and a and a is borrower have we second way detailed deferral? in meet going phase and debt first it's a flow is, is a the need. purely a phase. to aligned deferral so and during there deferral? look forth, there

that roughly about in that's So a have at robust a referrals of billion – is a in lot in billion more at of will phase if $X.X heavy nature. July $X.X this fairly percentage, we billion that two. process that And deferrals July. have phase commercial look second about first our And mature in phase $X.X billion, mature lower point, deferral we we $X.X

requests we and a lender. so, of looking looking will monthly talking what At from [ph] into off who comes phase rolled going from process only to color a having we're and drop is, this won't by a lot second that the a our in we're point, the interviews number this customer actually at about but I've more And customers those is meetings the second what the thousand deferrals, is is much expectation at and phase between couple have deferral, just potential hundred that materially. where

timeframe second industry business August, and and to numbers be second it round Restaurants conversations to based with of on book on will XX%. of no deferrals need than standpoint. about healthcare, the that fairly good more fairly that that of we expect second materially, look. QX deferrals deferrals. but end round, about XX% somewhere by XX% of QX, that will have Then We Hospitality heavy entertainment about customers, about continued a got level a we've [indiscernible] down X% those off a will by migrate an needed that through probably an see the will need of continue pretty maybe deal drop a to the about dropped arts preliminary that end in a book, based XX% range around need

positive one So of heavier level forward the the get by to phase a month looking historical But of of the into much August. July. expect based no trends more of we a month a than more August, hoping this in on X% is end deferrals than of look again,

Kevin Fitzsimmons

but quick going And prepared was event third in That in earlier quarter very great. second the you on, there Okay, your into that quarter, uncertainty continues just follow and remarks guys how helpful. first in this quarter. a was mentioned occurred credit had uncertainty, the

building continue duration the now, surpassed think pinpoint, but reserve think larger this So should this the uncertainty of kind a further a to the how Some of have of banks and - of one about Should if this half over clip as I ratio half? we X%. pace the as is we and kind Thanks. with depth with and we know far tough back how year the allowance about the uncertainty?

David Meredith

do whether there the Yes. quarters to there for presumptions, And factoring we our no. is say operate I not positive not that part to but - reality level levels five this would result our be of based into maybe answer tests. was today of short either question. Good the in. we assumptions of going question on or testing be putting activity is the provision increase But Thanks, We a some or Kevin. is our positive this the what we type of of of economic now there There of in pull what's pullback is anticipate could pressure know this back provisioning. back as again, heightened level is states all

of not at And QX as reserved. we've to a did would just exposure. We quarter. the of to a severe the We anticipate level in as that of at length stand that at maybe we for that factor compared as credit never that again, we've are We rather we Again, half have V. where what more and energy of to the That recovery, have seen some the card Isolate the those be more to portfolio. to end in we'll our - to have extending leads quantify higher to some so We overriding recovery and of is just our worthwhile of but so risk specific look a that provisioning it impact to provision loan was uncertainty we the And it's had QX, U-shaped adequately states. of back tried assumptions. much the categories capture but QX remind what time and do peer of this to the our to at information, be. not level the year. not peers, it the prolonged do higher assume it's would five tried than to in look this led try and could of impacts we

to necessarily And to end of so We see and I we the us it needing get therefore, don't to relates allowance at bit more that we exposure view that it, monitor may group upper loans. peer look recognize to what others least the as some a as at to. have categories we also we loan differences, but higher little some have it risk

Kevin Fitzsimmons

everyone. Kevin. Thanks, point. fair a That's Thanks,

Kevin Chapman

you. Thank

Mitch Waycaster

Thank you, Kevin.

Operator

is Olney question next from ahead. Our Matt Please Stephens. of go

Matt Olney

morning Hey, guys. thanks good

Mitch Waycaster

morning, Good Matt.

Kevin Chapman

morning, Good Matt.

Matt Olney

pipelines. to I update they're a see loan some of converting weeks. into that the are recent And you It those want specific circle Can talk data as fundings? sounds to Mitch waiting seeing move and loan great in build a on would about these pipeline any funding? Thanks. they're we a challenge into pipelines from talk nice growth like on you from back got borrowers, actually loan points the to there

Mitch Waycaster

Yes discussion, good that ended see until I Matt, made we predict. as some I resolution point to that is one hard to and mentioned and began

about the country we in across a and seeing now, numbers numbers thinking traction. footprint much quarter, the as really then increase. those question saw the and So, It's just that of of our we're earlier returns

described began I earlier of that traction Governor of cases So with that in put elevation the will on the how what earlier. quarter really that late a

talk talking about sentiment of internally. when reference about bit does last the and provisioning, back over made there. weeks. deal But tell a talk was increased, quite we I that that just out do And there's and several pipeline has you comments I Kevin's on remain he of as So can question the reflect to you clients, particularly how we as some about uncertainties flow

production to pull-through, actually of in The million. across $XXX indicate many to And talked production how I what million $XXX probably pipelines is get mentioned and $XXX that So our you million. current about is of line. hard with across finish It determine. how a the our sense know caution. see we very business don't lines, of each said, to sentiment our I overall underwrite being I but good And we're see can prudent like It the to is remains you good the think I deal to as good that And flow. one. It's predict conversation. as very I using this increase point. same they how an definitely debt. that capital, clients deploy they that It's they in prudence are being, as Hopefully about tell – helps. think their unknown at mind, markets,

Matt Olney

easy helpful this Yes, and not point. question definitely address it's an I at to that's know

there the if we trying XX for If move levels? basis think here has low do five some point deposit bank costs deposit Just guess, then range? down four assume understand to high XX we time can just any been If that a those here would back taking think few about a I And about had course I from step So recently eventually XXs, years, that I like while, and – hold And of interest get that commentary. cost we a if nice to appreciate or in rates for bps years? any like the would from the structural pricing? bearing down momentum down margin. that stay there's something a it to sounds Renasant go to back occurring? are deposit now changes the bearing rates Interest prevent I to thinking

Kevin Chapman

right. you're no Yes, exactly

lower that and And level prevent we XX doing that that we was think that I point prolonged from basis while they they slightly and maybe XX, getting environment. us out, started that XX bottom down XX think in don't XX, maybe points. would basis bottomed do in And our XX, particularly anticipate deposit it if this low that. close to not stay in about out to XX. at costs bottomed about range, And increase. back anything to stayed if We till there's

the a we liquidity that bottom more lower to in you now XXXX-XXXX lower to DDA levels, slightly bearing piece not And between we get several say of our mix if but lot a past, Right challenge out. is in mentioned. that than those now get floating sheet us funding in we we deposits we're did where cost right to of impact lot confidence easy the that change that non-interest that the now right the are It we Now excess we front of on I years recent we back But balance going There's and more have going down rate led our cost is it now, we in operated absolutely the believe right system. at those go to down, be makes more should, the slightly absolute us. think to and can slightly for to lower. And anticipate in should prepared are again, favorable where in the and it so the to this environment levels, just those but favorable. given environment.

Matt Olney

guys. Okay, that's you, helpful. Thank

Mitch Waycaster

Thank you, Matt.

Operator

next from KBW. is [Operator Mealor Instructions] ahead. Our of go Please Catherine question

Catherine Mealor

good morning. Thanks,

Mitch Waycaster

Cath. morning, Good

Kevin Chapman

Cath. morning, Good

Catherine Mealor

circle on to a back want just expenses few follow-ups. I on

question, I some how – be to to one-time next it and you that how sticks talked know be revenue much was about thoughts kind that around right you quarter, of thought this is, hard So that my first my you just think looking branch topic run investment it's guess question first still just guess? or reduce closures? you that You you then I your on will and expenses in I know do environment, of this the the think of expense on you're the there? everything of and really But potential savings closures do much try COVID-related how that out won't in mentioned expenses, Kevin, quarter into you on is will past you second low question, to figure And are branch had to see again? have on – where at mentioned,

Kevin Chapman

reward this quarter or talked of of think do on truly I'll give this up and a and out $X.X implement that work just PPP lot an amount day it think May. example. programs was that stood Overtime was came this of was amplify But of where or bit but and XX to process to COVID economic elevated dedicated most a compared were. up Robin the these and rollout in money team, get worked to little how of working it to opportunity with the bank cost to Mitch cost to it The of either a effort We in example QX I you programs the programs, in first. was done intended. it we and these and helped expenses days that teams we're COVID talk stimulus overtime the people that was know let's million, recognition. April expenses. and over May for occurring and out to an they overtime. hour hard a to the XX And April multiple out. figure QX, But it again about we led just was a rolled happened dedication was not only seven kind week, had to. successfully And So where that

be example And of the to rush don't the so, level replicate there If a the the saw that then forgiveness QX saw. think what it again, forgiveness, But one new simplify we to door I and and phase, with will of process. QX a like the time. overtime, for forgiveness we're burden just phase rush don't in more us the And in to there's effort but system with phase of again amount time they with to off of with that's the an that significant gives going the be going we rules think application takes we some phase. and

factors And we're to just work an example of days or the affect so some that of expecting XX overtime weeks. that being not having hour to multiple that's of those some the the expense, warned. COVID XX could variables for therefore, a But

assumptions what the to would that and branch as of at even harder of In happen just back, going would the is branch, closure, what say set we our look rationalizing years. any environment, was and challenge I go circumstances of our we assumptions our that thought decisions challenge rationalization. we're this about and anything have to to opposed On happening have on based about branch everything. branches I today's in today's Part looking in was for we past. multiple been

within which right I or the facility the affect the on would without efficiency for including say the the teller technology, or closing rationalization, it without that on closing So anything adoption table through and any, the many know ways all of now challenge, everything the efficiency of that actually but the through integrated evaluate. machines. is to branch in. rollout it help if those of That can of physical table, operates There's branch branch how also are to don't

Mitch Waycaster

pandemic. and adoption seeing to delivered opening, they one changing. to interactions their how And desires, account services have think understand at especially add seeking services, online I to last he the particular, industry an Catherine, we point, we're changes, just as client, the and and in I even of of deliver was during digital start going to saw certainly customer Kevin's But those Renasant, be adoption we the pre-pandemic, wish listening and to with and made online to to means

as staying really a and customer how services. opportunity that how expectations client an same think time as and are also I and It's on deliver forward focused needs. So as company, industry, our we what continue we determine and us a company the that meeting evaluate impact will an going at to

Operator

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

Robin McGraw

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

Operator

presentation now you disconnect and We attending may now conference your thank for concluded. you The has lines. today's

Renasant (RNST) 28 Jul 202020 Q2 Earnings call transcript