RNST - Earnings call transcript Q1 2021

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Operator

Good morning and welcome to Renasant Corp.

First Quarter 2021 Earnings 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. Please note that this event is being recorded.

turn over to Renasant Kelly like Corp. I'd the to call Hutcheson, Now, go Please ahead.

Kelly Hutcheson

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

data our our of but time. releases filings update future please appear or pandemic forward-looking country and events which condition to these under are remain results many not to significant to actual many virus, in specifically fluctuation, no the to effects our as link are operating anticipated press the to COVID-XX we the we www.renasant.com from rate or other will improving of changes, has pandemic could tab. likely pandemic comments cause call are to in with vaccines obligation continue statements. has of and undertake to the changes results changed market of factors of performance, during factors recently any differ assumptions, impact the statements the our future from the the Furthermore, financial including There We well filed the begin, impact in include, this results. posted as Even and and revise obligation earnings arrest factors over administered Before occurrence the forward-looking all and statements, operating uncertainty. our and Exchange the COVID-XX expectations the taken expressed reflect been disclaim to while discussed to magnify this federal results follow-on factors materially us. interest across people, measures be Commission, impact portfolio our unanticipated be will more to to or Securities Other the state other and which note magnified news on the and site that at likely involve factors risk regulatory limited recent as release, forward-looking and footprint that local and corporate conditions

that non-GAAP GAAP addition, this non-GAAP the President our Executive the of may we most measures of financial over financial now, In can are call Waycaster. to A earnings our measures. the be found Chief reconciliation to I comparable some turn morning And measures release. will and Officer, Mitch in the measures discuss

Mitch Waycaster

joining you, Thank you the good We Kelly and today. morning. appreciate call

of our Jim for will quarter, the for Kevin balance discuss observations outlook results first the the I quarter the offer Before year. and and on

the slight represent quarter a was loan across start of significant Performance First in increase a by good credit net in to and lines business our results marked markets. reflects reported strong deposits, net all income. and year. stable the quarter growth, The contributions quarter metrics,

economic of continue We our throughout activity region. see signs to improving

has grown in Throughout one of that true a Our one times. additional reputation believe At the our demand market in to provider second hope as half company going about its serving I is often team to year. this activity the that the we in pandemic, choice loan talk customers. remained begins Renasant, our as challenging bank. to we of service financial spur approach have these

core remain over call funding, and I committed Kevin. the core which to also principles, to strength. will turn emphasize We now asset capital quality,

Kevin Chapman

Thanks Mitch.

to or million quarter’s Our $X.XX contributed diluted first share. per Several the factors first EPS. quarter earnings were $XX

previous quarters. division production. had recognized mortgage our experienced fully that in all We quarter First, charges in another impairment recovered we strong

toward plan, early from began quarter with asset of our the metrics in strong improved previous and quality the as we in of the interest containment. to in cost closure according introduced Savings our our will forgiveness. unnecessary. coupled net an see and efforts savings result efforts We and repricing to continues we of in ongoing XXXX. our April. XXXX, income two recognized completed XX% program annual we $X Efficiency a anticipate being voluntary upon provision to mind, still quarter initiatives loan of quarter result effects improved be that deposit with those additional approximately top branches PPP savings of income aimed of are positive stable credit six economic the Second, early these fee cost Last, this and forecast tracking realized million retirement during around in of resulted expense first

winter while our metrics becoming cases complete Our consider the this economic of growth, excess deliberate. by seeing in our stabilizing impact we lines vaccines work continue digital margin, With throughout fee our business trending mobile balance gains we not operating from we in the network, are and focusing direction. in expectations markets with costs, virus And available broadly for are continues to and decision belief and believe short-term often on can evolve than rather services positive income more more the convenient to efficiency Still pandemic. our attractive, This are reducing declining and our branch of sheet and peak, is moving affirms many to efforts are other our quicker and stronger continue profitability and evaluate forward more grow activity model the generate on any our and leveraging additional be long-term efficiency a of before goals banking we area footprint. our fade that behavior to will access customer to attained.

Protection age. investments an be day are on technology The innovation in of provide and our seek Paycheck the and We come focus our with team. to important they've customers continues security this that focused expect Program that and to

our forgiven customers with having loans during $XXX phase to first forgiveness round PPP around assisting million the been are of We quarter. the

We utilize allows with of managers and one of platform the our loans In through continue on into we to in forgiveness, it two our We needs first our for the have firm $XXX fees realized they quarter, a I'll serving to loans the referral to our And focus customers. PPP arrangement we loan This originate sheet. traditional round technology million our approximately pandemic. relationship entered relationship growth round PPP million remaining our round another its balance of as ensuring to one turn PPP customers, to over the referral while lasting approximately from partners. Jim. customers $X.X operate through meet now, effects on

Jim Mabry

Thank you, Kevin.

the about much ratio anticipated, XX%. of has the accounts. walk quarters. PPP the XX%, non-interest largely that PPP with There we of forgiveness increase has This in growth the for shown flat will by than sheet, grew pace $XXX in outstanding quarter. next quarter’s pandemic, million together through accelerate bearing million we driven As loan quarter-end. balance the growth as deposits were results, been were over from were to a reference a slides of was I an beginning Loans, X. with slower deposit average excluding [footings] the deck. in at and the And Since deposits the Starting about XXX been to essentially process Page which on the we our up loans to deposit while few expect brought quarter, earnings the

did income a capital purchased or to million quarter, Net incur ACL deferrals a have steady. in as XX with interest non-performing a now million. dues, $X flexibility $X relatively growth, accelerated XX shown under from their quarter, be deferred company of provide through remained was M&A on up Credit ratios by approximately X.XX%. possible charged-off buybacks, provision the $XX expense build Page aided credit million we and the million metrics for of of of was recovery loans asset classified, $XX loan not PPP COVID-related seen the on remaining previously In quarter Pages fees PPP for deferred During below the continued are the the opportunities. to we and revenue and all charge-offs quality Net X%. recognition represented percentage ex-PPP Of fees were Past was XX. and a as are slightly moved and $X.X approximately X.XX% measures the loan. recognized. recognition just million. down income,

after quarter. margin, from interest excluding QX and which was basis the points. accretion XX Our basis asset strong purchase $XX the in core another MSR point on by weighed margin the from benefited the our down income cash quarter of excludes write-up approximately impact included was Excess PPP about XX recoveries million. that in down accounting from Non-interest also X mortgage basis points

an of gains fee were increase production. approximately increase driven $X.X compensation securities the generally of as income well. the and was QX million of also increases with by recognized higher expenses mortgage expense a result in categories quarter. for Most exhibited $X We exclusions Non-interest as million

Mitch. to began turn I mentioned, and expect balance of benefits As the QX announced expense see in year. of the Kevin the realization now will throughout back continued call initiatives over the we also to

Mitch Waycaster

of security to Thank value true drive experienced values our being and earned team determination committed of to We you, commend and this we our Jim. employees be to to core in have In that remain closing, strong and staying wouldn't all good meeting our of for safety start a without to our a needs clients communities the the our members, we of knowing the will long-term success. citizen shareholders. our XXXX which we and

call over to for Now, turn the operator we'll the Q&A.

Operator

Milsaps [Operator Please question Piper Brad Instructions] of comes ahead. Sandler. First from go

Brad Milsaps

morning. good Hey,

Mitch Waycaster

Brad. morning, Good

Brad Milsaps

you kind growth you you the, seeing, I you you new kind for kind kind Hey, environment, just kind relative loan year, know, expectations are what know, the on you're know, book Mitch, about of, of know, are, current bit the of importantly, the questions. talk thanks for books, of balance was the maybe, if the what little curious know, coming kind to your yield? taking where a and you of loans of of

Mitch Waycaster

do Absolutely. Brad. Happy that to

our of the then with quarter for And ended reflect I'll just production and look things on start me kind Let pipeline. forward. the how going XX-day

compares with began for quarter. XXX this quarter That million. the the we XXX to of pipeline prior So,

The If describe all continue cautiously a say and being across I flow deal to pipeline. we continue considering continue optimistic we in early see but would see would to good, I good So, thing, of Alabama, that that Tennessee, Georgia, and a to XQ Florida, XX% corporate lines. in Mississippi, would be business XX% market, commercial in business in Central the Panhandle, Florida and line. in in down, break by I in XX% XX% our and markets our XX%

your So, range question, on should that XX XX days. would I at this in looking the million about, the point indicates, current say, within know XXX just of quarter. in excuse that outstanding To non-purchase coming XXX pipeline, at you me, based and growth pipeline million production to looking result forward approximately the

growth to in loan we So, continue positive XQ. expect

guidance. about good development the in is that positive we'll markets talent. You Hopefully, opening in the stabilization we more on vaccines, you see. activity continue say cases, the we of of see continue the the give know, and it momentum defined looking production. that, with the the our thing our say, difficult to economic I will feel hopefully I to to continued you referred forward reflect that know, remarks. until we remains resolution Kevin pandemic that like and you One And, whether, know, is certainly

XXX if and region, have I of our production it’s that reflective We past by million look pipeline. quarter, at

across both the various see the the new production. that Again, our markets talent, existing the We that number XX% to invested that in to and in as from line, in, quarters. continue was we've close of well, business past of talent

that again, So hear just the tone market, from about we client good base. and continue feel to talent optimistic

Brad Milsaps

cost of outlined just just heard you curious know, maybe million Kevin get through you the you speak the fight and up, comps, still you future, kind guys and you over know there's number think, mentioned tougher update mortgage loans, need you is then X as know a term? terms XXXX? I you on kind good bit, on, you my I'm of the I savings just Thank to expense Or the, the feel any if Thanks, quarter. in as new near about is any savings last rates you. of follow about, that know, we Mitch maybe, little

Mitch Waycaster

and base ask Sure. comment the to circle back question. expense on I'll the mortgage and can pricing maybe Jim Jim? from then Kevin

Jim Mabry

of yield yield and ex-PPPs terms right saw yield, about production in Brad X%. and core current current Sure. ex-accretable

XXX look you give you on will pick quarters, want XXX, second XXX of if terms like XXX start which we QX And XXXX, in the if up this QX. QX, and Kevin, and XXX. production yield. what Go last few back or looking you sense XXX, were to QX QX part his with of in XXX is to at it's think XXXX; a I I'll there? in in

Kevin Chapman

Good to. morning, glad Sure. Be Brad.

Just Jim size comments out achieving on we as laid as far think initiatives we announced where the expenses, are, we and the I QX. the his announced two expense in in

for table call as us there's [further on options look several says], we at still As we the move forward.

to the branch network, the network. on evaluate we Just continue branch

couple in one. will action at looking items couple and that a a branches occur closely taking and where a of of we're located QX couple QX consolidating into have We items, them of

instances branch save. network, staffing we them models. potential into and three to branches We one. consolidate for evaluate to take have continue the only cognizant for the we'll of to Long-term, where but expense two look ways that And of just our not be three

side, may out, numbers in we but checks, we they things revenue highlight we things A uptick have interest that's from liquidity round of saw And when uptake. charges. income. just an went an saw that the the would actually so we of service On the counterintuitive stuck couple notable. a just got in One is, that stimulus the uptick another and that not on non couple think are of

come some in declined to we're starting see to fee our That us. other XXXX. really So, income back of significantly

is thing other $XXX,XXX linked-quarter They're basis. commissions. highlight our fees on up and I'd a The

And look efficiency. income well help the as headwinds at as you so, we in in expense expect other as potential the to kick lines our of efficiency, initiatives to the we years, at, and some non-interest with look saving in we as later know, mortgage

Operator

you. Thank

comes from go of Demba Please Jennifer question Truist Securities. Next ahead.

Jennifer Demba

hear me? Thank Can you you.

Mitch Waycaster

Yes. Good morning, Jennifer.

Jennifer Demba

pricing Good morning. just months, an think his how about are now. that curious, has thinking reactions all? deal right mentioned few a that over acquisition uptick How you about at evaluate the or how interest it, Question Jim going you over when when short-term? do activity in past been you and at in you buyer’s on you There whether Thanks. monologue, about deal on look think to you're the price a do

Mitch Waycaster

done saying Thank as by past, you, have Jennifer. in we And opportunistic. consistently we let start remain our me

all So, but that producers added certainly strategic to circle – that's drive your new loan talking was we how opportunities to relative I six to partners to mentioned you're question, QX. and to all appetite. opportunities, I'm value. additional always see your business and considerations added exists would but into we to production, question, continue certainly going begin particularly talent model evaluate go we markets, answer In that the we and culture with the things M&A shareholder as when considering about sure and, question, we you just that but alignment know we to and there, that making better And get are of in And cases, those price, back and some I the those are opportunities. continue risk we we you evaluate really it’s transaction, together, know,

Jennifer Demba

Okay. Thank very you much.

Mitch Waycaster

Thank you.

Operator

next Kevin go Davidson. with The ahead. you. Fitzsimmons Thank Please D. A. question is from

Kevin Fitzsimmons

good morning, Hey, guys.

Mitch Waycaster

Good morning, Kevin.

Kevin Fitzsimmons

be going for I'm around There's not recently as gaining acquisitions topic you. a and closed opportunities whether, are talent, that know, if big bank for are it's number on that you your footprint, to large on gaining on or business, that necessarily of those Hey, M&A. view either in or pending just or going you curious, a potential tailwind

Mitch Waycaster

Yeah.

So, question. good Kevin,

past possibly as announced, that relative maybe that typically, you in certainly as that from But some in proves cases, length past, think have had And change to the we in those time. a to been employment. but were not causes with maybe specific then the people discussion just the relationships already industry course, to the company recently that our cases disruption, seen people some have I make we've comes know, continuing of in in many for Of in industry and conversations choice make, their opportunities. this the

talent, you thing conversations. certainly is, to main have and we continue those the we good we do know So, here have

had As mentioned, I we the first quarter. join producers in new six just

a for your be and we the look those result to consistently, up do industry, point those in those we have may sometimes to opportunity making changes you as or picking know, the So, in conversations decision. somebody

So, a as we it potential do see opportunity.

Kevin Fitzsimmons

thanks, Mitch. Okay,

the purchases to philosophically asset now, what you the the know, I'm matter whole are that know, Thanks. pull quarter if your curious, checks, Just but comfort maybe loan it just sure to out level? right then some waiting excess looks we're up of liquidity stimulus at is like the can your you is at this way, where up, and and but pick to that drag same securities, and to means demand still that dollars of perhaps there on you it, I'm growth relative the with a like, seeing have around time, And how from that you just maybe, you base, even liquidity? obviously, think period? going offset you of but getting or how you stepped put group, to curious of can and cash you're that that just that NII right is feel excess of this sticks looking It levers margin, not work larger, drag is

Mitch Waycaster

Thank you, putting to to it Kevin. work. the And respond I'll let Jim liquidity and

Jim Mabry

morning, know, observations. a you to Good you at think sort question, Kevin. of your alluded to of answer end the couple And, but the I

So think, have And then going you growth continue see, know, that, deposits this. to we of maybe deposit into growth in know, the stickier, numbers thought in saw you QX, the QX. been I early us all we

abating point, terms it seem So, challenge. that in at to liquidity of this be doesn't

all and we how behavior future We're the don't sort in quarter. Our to in up, of And thoughtful going that and not want liquidity know to thoughts [net deploying know those a also balanced quarters. they're to you on behave take work, to of liquidities], we one approach. put deposits going

we'll half the the and that'll know, So, we absorb and loans year, that to increases hope to second the of see get you liquidity. is that start as

thing thinking other as that to goal also does focused try yeah interest is that the out, a on the don't you net it is also and to keep possible focus, we on know. weigh it's, steady point but We're there as say income and the so dollars. the know, definitely margin You about clearly margin. as I’d while we're

silver but don't us it not dramatic. I think what probably build have as book, going to you're securities in this, continued some a we bullet from is but see So, relates to the

Kevin Fitzsimmons

Jim, Alright, very much. great, thanks. Thanks

Mitch Waycaster

Thank you, Kevin.

Operator

KBW. comes question Next of from ahead. go Please Catherine Mealor

Catherine Mealor

Thank you. Good morning.

Mitch Waycaster

Catherine. morning, Good

Catherine Mealor

Just you the [can revenue of update mortgage here, and back efficiency mortgage how maybe an outlook also on on algorithm half for to]? and in your mortgage think turn about a this question

Mitch Waycaster

sure. Yeah, Good morning.

the, mean, quarter our I are and business good And mortgage, of terms it know, that what obviously, guess a what's fall went tailwind quarters think But had something upcoming certainly off along I And in was others and that expectations of going of we're going XXXX. and it's In anticipate continue you on that that in in is it of XXXX. as thoughts. couple we a be year. we the into not that lines, to the going XXXX, this mindful in not there. was we be is to it to I those

So, try but efficiency. around, income, we're replace on we're do counting that thinking to and the great, we're to drag not, on they're if turn other And about things ways not that.

So, talked Kevin as not about was you to but other know, what the you mortgage, know, profitability or, probably going initiatives, expense XXXX. whether you things, is, it's in be other revenue it know, that with

which be the gain a efficiency decline, on drag see [sale we'll So, and efficiency. that will go on overall ratio margin] up,

purchase the would they're get second talk we're what a for really out mortgage some a of inventory So, bankers, volume, you we think, And as to think because inventory when and that's And we're our hoping into thing the biggest not looking is as that's, issue year. know, And that just drive improvement lot see we'll the biggest, there's there. see, for know, to there, you half there. of as the you the shop. I I certainly

Catherine Mealor

sense. makes That

that a just And think Okay. the you lot about kind of number, do there's heading maybe think eventually path day bottoms? levels Renasant talk reserve about then one back how ACL the where CECL to, reserve, ratio on of you

Mitch Waycaster

Jim, you, to want you Catherine. comment? Thank

Jim Mabry

Sure.

in times. some an for probably prior growth. quarters shows think through will I long of that the we I we've go I on we think have others, that down. – a And CECL, a cushion, thing like saw, but we We're is, still again, to been started the getting you don't data see think we hope X% going can touch weighs in still see ensuing allowance didn't uncertain anytime don't we'll we're And like in we that mentally, expense – you that quarters, in one. QX. pandemic. day were to we, as if be we're and soon. don't adopted we absorb us when to not a So, I below the think And other And what level we And us see hurry I that's to back that in want be

model don't Just, that's be just think comfortable we'll we're going the see something I what to yields, with. but mentally,

I – we what is. that to growth, [through really hoping absorb go think as what I we're for that that So, know we'll number that yields, And data don't long we're allowance. see but year], the

we're And not best we're to not so, don't the – to again, probably we're release I reserves, it. say I way guess be to going anxious think –

Catherine Mealor

Got you. right. of Well, sense. All it. makes Kind thank

Mitch Waycaster

you, Thank Catherine.

Operator

Instructions] Next Stephens. Matt comes Please [Operator go Olney ahead. from of question

Matt Olney

morning guys. Hey, Good thanks.

Mitch Waycaster

morning, Good Matt.

Matt Olney

presentation. it XXXX, quarter? locked on with like different want the volume looks I increased that respect to channels increased. XXXX so, circle I around you any why discussion, first trying XX or XQ Thanks. that guys was Just was strategy your your good disclosures more mortgage some back in of from to surprised the and Slide give to on XX% XQ appreciate to

Mitch Waycaster

margin, you a don't QX Matt, know that we know about QX. was to came volume did point pursuing any know want I out. that was, business you add see different from We It grow was different anything Hey got as in the business that did dramatically are at, did the that nothing there Kevin, that? I you way there to if that we know, thoughts you we to don't QX. smaller there but in

Kevin Chapman

look we continue at do for multiple to hires. channels. did have opportunities We I don't think that there's new Again, We differently. do No. anything

picked up wholesale bit. see, a can little you As

in So, migration. we in amount significant particular sure anything I'm continuing where than there's not a I just other don't to markets see – be of in-bound

we If at is states. you the within that those there in, operate above average in-bound migration mortgage our states group, in look

just trend the to the we're in And so, be that we providing fact opportunity. it continue. more markets just And that may expect are

in-bound to in continue. states those expect migration We

So a that we us the be tailwind for will out mortgage. as look in on future

As Jim Outside inventory. we about supply on remain mortgage. constraints our mentioned, the of its still that, optimistic outlook

Matt Olney

few on Thanks for I originations quarter? And and in that. the what you minutes late, were sales have so you have the may call the hopped the a mortgage disclosed this, what do but within first volumes –

Mitch Waycaster

the We've is volume, got – of the XX. Page locked course on

other to you get back on. have to The data, I

Matt Olney

And sale the talked pressure, gain that's Okay, on first I think from pressure any some the quarter. Did you of just fine. about just peers Thanks. on largely see margins those thoughts additional just, of quarter, in any your here? margins in then later margins on this

Mitch Waycaster

you see if if January And that, were look at what to you're declines the February about, from terms you would by that. to in February, see month, in of the margins to looking did exactly We QX at you March. talked

what So, seeing in the we're I is environment. right expectation others to same change you our think thing continue, some and absent holds, as but are, know, we'll the that's going year we're – yes, see the

Matt Olney

with sticking but mortgage, of around little this million. outside then fees And showing think other I elevated quarter, were a still $XX fees, I'm Okay.

from that fees the think fees quarter in around $X about we should million of I referrals disclosed to within with to running quarter, first PPP, was around other? guys anything range. you $X million $X per else see respect think in million I it

Mitch Waycaster

Kevin that category I that pointed broad it his one – earlier, don't comments sticks was I that know in don't in any based. PPP. know you out. mentioned, sticks you million anything there I was X.X as mentioned out. PPP, there's mean, the

Kevin Chapman

QX, one would in it's other our thing, company. occurrence is Matt, in normal and insurance and that a highlight

item contingency in have a April. – We a one-time year, once occurs some not March a income. one-time it item, It's in typically

recognize upwards But and company, recurring, as that of income. QX, the QX, look the of And to happens each we majority year-over-year, contingency QX to you significant normal insurance it a if in drastic. And that's, our QX at of pretty at $XXX,XXX it if in isn't that's impact look you again, So, there's swing. QX out in coming year. happens typically QX but of

Matt Olney

then Okay. the and future one-time that fees, it $X.X you got see just XQ? or a referral PPP on originations like benefit we a the additional from And is that in fees the could in million other,

Jim Mabry

The way at QX, you'd QX similar tracking, look earnings And impact But QX. we're of from we as I would would see that terms would a out in we'll expect in plays two, QX. to it round how there. look think see I similar on

Matt Olney

within X.X clarify, you're that about I'm talking PPP the income, income the fee interest with to And are respect not that to fees net million, Jim? is same thing talking about

Jim Mabry

we're income, sort Correct. to, that. of fee PPP of of Yes, the I'm two getting in referring off that's correct. round

Matt Olney

is tail there in is there a tail beyond program be once a few And weeks beyond the could XQ that shutdown, wouldn't go or here that a and Okay. on that? then presumably

Jim Mabry

after our meaningful QX, PPP contribution income. you likely I not think from fee in round two would see

Matt Olney

guys. you, Thank me. from all That's Okay.

Mitch Waycaster

Matt. Thank you,

Operator

This our session. concludes question-and-answer

Waycaster remarks. I turn closing over conference to ahead. for Mitch back like go the would to Now, Please

Mitch Waycaster

Conference Corporation. we of D.A. Financial each Thank forward you, and Thank look appreciate in forward again Bank soon your And Institutions your on time, Gulf Annual on South in We Xth. speaking with the to Davidson X, [Nick]. participating interest and you. May Renasant Conference the to you look the

Operator

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

disconnect. now may You

Renasant (RNST) 28 Apr 212021 Q1 Earnings call transcript