RNST - Earnings call transcript Q1 2022

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Operator

Good day and welcome to the Renasant Corporation 2022 First Quarter Earnings Conference Call and Webcast. All participants will be in a 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 with Renasant Corporation. ahead. go Please

Kelly Hutcheson

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

during to not Before we begin, factors are risk limited will note specifically to other expectations Commission, our obligation future the at revise that interest reflect and expressed many the statements with no www.renasant.com, earnings involve to factors forward-looking which include, under our and uncertainty. undertake the cause events We Securities this anticipated changes Press any actual differ but our statements, changes, filings unanticipated Releases results we the or many posted News Such update are our be time. recently obligation tab. recent regulatory and call of forward-looking results other please over comments results corporate of There that or could or assumptions, to including fluctuation, from Data and factors to, the changed in & forward-looking rate in Market performance, disclaim link site, release, statements. Exchange occurrence portfolio operating discussed filed materially to the been which has

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

Mitch Waycaster

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

accelerated year strong. first of the discuss would quarter payoffs very the I observations to and the Loan balance for moderated as Before Kevin the the outlook on growth like remained XXXX. quarter, of the Jim production for in offer results the start and and

can headwinds, further remain also We economic hopeful conditions in presenting while improvement expense be continued And accomplished. are we progress showed that management.

We strong. and markets, in deposits, number ability balance are quality now of to our am a a Renasant to to about growth are shareholder are operate will in proud optimistic operating be Kevin. of in markets Operating important I where with credit fortunate activities very that us emphasizes over leads important are that core grow, migration maintaining development dynamic to business value at and creation. principles we sheet call capital, that turn strong believe a for the team I

Kevin Chapman

Thanks Mitch.

fourth per first million share per in share were the quarter XXXX. to diluted $XX $X.XX or quarter diluted or million compared earnings of $X.XX Our $XX

lines core environment operations volatile this operating to some and Our division. normal of the to mortgage other banking our quarter and our return of business degree, strengthened mitigated

moderating the quarter. and banking side, to for contributed On production payoffs growth strong the loan solid our loan

Commercial headquartered of on date. the closed the We asset-based Birmingham, million which added $XX lending in Southeastern acquisition acquisition company also successfully Alabama, an Finance, in loans

Excluding loans, the annualized these loan growth acquired we quarter. XX% experienced for

of results in insurance wealth for produced the quarter. consecutive expenses Our management strong fifth for falling discipline and quarter and resulted focus our continued the expense divisions

present any pressures but focusing offsets in resulting finding the on expense inflationary we We the for broader pressures. aren't these immune to from markets, increases are

to operations Although the to I full Xst, second yesterday, the take our a XXXX. for of will consumer of effect certain In fund over January expense now These call there to also be of announced XXXX. we changes Jim. the separate will to consumer fees and full we other some first our non-interest totaled turn than in $X.X of linked deposit-related quarter total in eliminated These plans fees. million non-sufficient the eliminate quarter increases due increase release fees less anticipate may quarter merit XXXX. be realization still and year quarter XXXX Southeastern,

Jim Mabry

Thank Kevin. you,

results, slides quarter's grew deck. the from modestly. through with the footings balance reference will Starting sheet, As earnings we total the I walk

We invest negative a excess just impact over value the in of our on liquidity fair resulting $XXX previous the adjustment of $XXX $XXX portfolio a XXXX. QX portfolio, million portfolio, interest increasing securities our of quarter. market some loans our in of had increased million. Rising continue million value from rates to Total from the

The nearly million of million growth was with loan all another terms of $XXX categories. net new and first quarter strong driving in $XXX production, in quarter advances in production

only of declined as Our March during PPP $X million portfolio XXst. with the million $XX quarter, outstanding

the regulatory expense. attributable to We stable of $XXX,XXX, interest loan of quarter-over-quarter a minimums recorded growth. from and million debt $XXX,XXX November of remainder non-interest income from of of of required of of capital quality to We with charge-offs our were record strength on due and of a criticized pages on commitments to million Southeastern primarily fewer Past release be two the recognition, net well days X.XX% increased XXXX. to position. credit portfolio our our offset through remain interest X.XX%. measures Credit asset provision charge-offs of sub attributable capital full Provision Net Finance total quarter and excess shown from remained interest the as ACL All other our $X.X was $X.X declined reflected reflect $XXX,XXX. in helped loans expense in the all securities expense issuance of from to The income declined income acquisition our are considered percentage for inconsequential. Commercial ratios is reserve relatively capitalized which non-performing a XX unfunded dues, XX. metrics and net interest

two basis QX. recoveries Our core from margin, which accretion interest excludes purchase points down accounting and was

Although we interest as QX, is work to improvement balance on believe put are under more loan rates we and in sheet margin to for as liquidity pressure yields poised rise. come continue

a we cost believe We base in are rate funding rising provides focused this environment. which core retaining on our and maintaining us funds, of leverage low

provided wealth business. that and of income new division seasonality mentioned these lines our As expected, in onetime to QX previous combination in of mortgage rates last expenses of return of in for business The Non-interest declined each quarter. in from in earnings divisions, from the expenses income But certain our mortgage a benefited offset down benefits from our and QX insurance items. from the and higher decline of growth from quarter. business the XXXX XXXX exclusions the division with call other salaries of our of normal were helped this the approximately and We in quarter $XXX,XXX expenses. management

charitable received during throughout quarter. to approximately also back dollar I call we and $X Georgia, Mitch. which will credit We for to the contributed over organizations turn dollar a for tax the now million Mississippi first

Mitch Waycaster

Jim. Thank you,

to our for the the us now and of ahead forward call pleased We Q&A. of to over are the with the quarter opportunities results the for for I remainder will year. first the operator look turn

Operator

you. Thank

session. And the from Milsaps [Operator will question-and-answer with We will now Brad first Piper Sandler. Please begin be Instructions] question go the ahead.

Brad Milsaps

Hey, questions. good my for morning. Thanks taking

Mitch Waycaster

Good Brad. morning,

Brad Milsaps

lower start expenses. XXXX, what expenses guidance the XXXX last being in maybe on is to appreciate which consistent with around I wanted Just than you said quarter.

you long like quarter if sense It give I you maybe magnitude. run point, little you're two sit a a the way know the Jim, back kind the one could seems last of rate. more today, as with talked to we third at us there. of expenses Just from quarters, reverting about

the you that maybe expenses move kind will do of So, year, of in trajectory-wise, back would where to from XQ as think increase you the ask some if come get maybe just think through level? wanted fact, to you

Kevin Chapman

Brad, Hey it's Kevin.

using as of couple as look made really yes, a going QX the the So, a look expenses just we at we and the things as year, in forward rest we our progress QX, for baseline. of out

quarter So, Southeastern be I of that, expenses million. in cause of total full continue But to salaries is $XX a see up. going if to think somewhat not and line, benefits is tick employee Outside increases of the to expense decreases. in to expecting most other around we're merit

I efforts to employee as upwards equipment merit $X a that's on use going go as Some and our look on on quarterly the seeing, of -- consolidate of or million to more and the rate year. of and that go and just ways and branches space and occupancy run being just either we're those the post-pandemic. the look we would million And as $X expect to facilities salaries our eliminate longer far decreases used our be facilities come of are some some side, to as we mindful increase no for at ongoing inflation benefits, that throughout of of I that the expect the wage throughout increases rest the would the to

to that expenses basis our just baseline, expect look, to in $X range the $X maybe it rate a quarterly in we million QX. be we as run So, million $XX based up as using on on a expenses million

Brad Milsaps

can kind XXXX, you the maybe should an the against like the end as out of to thinking Thanks interest efficiency XXXX on your update around backdrop loan guess, looks towards some get guys? Kevin. ratio into better growth of And what's And of before I of -- into targets momentum it That's laid environment? the us maybe helpful. what kind of just kind be end rate you've you efficiency of you for building year better XXXX,

Kevin Chapman

Yes.

is So, think just we mentioned I you laid everything culmination that the out. of what

still efficiency As on mortgage. way interest related to it's still its that. down. I the XX%. do upwards we the our going mention, XX%. return look getting impacted significantly how efficiency be QX, just of dependent ratio target normal, -- in drive the if by plan -- we're to there. at we're normal quickly working rapid QX of to what's heavily have it's what far will still to going did our ratio, target to to be We on going on increase of you short-term for rates largely XX%, to that and as efficiency Mortgage And get But the return

the percentage from improvement efficiency or XX%, mortgage two mortgage. exclude another exclude ratio, if that is you you company saw around efficiency hovering XX%, If XX% range ratio and total our

to the expenses, complement we're work we see are that loan going play prospects increases all driving on and future the things revenue and the that the of in So, rate on our efficiency all doing expenses. bringing equation growth, the advantage on done into to we've momentum

Brad Milsaps

hop Thank Thanks. Great. you in queue. back I'll guys.

Mitch Waycaster

Thank you, Brad.

Operator

The Catherine Please KBW. comes from from go ahead. next Mealor question

Catherine Mealor

One Or we more a you in lower Thanks. the is think in mortgage fully do base? could reduction mortgage on reflected environment, that of quarter? we there? How And savings follow-up revenue the expense much conversation. did there is see the expense see this expenses

Kevin Chapman

we I look I as production, baked. fully at think volatility due are just the think expenses to

mortgage prospects what of tighter lower maybe We the operations are based look looking volumes, margins. like on at does the

pressures. are at So, further there of there. looking at we revenue looking what normal is production, efficient the expense just effort the saw, the become accurate levels in the in consideration think, rate I take -- into of mortgage the of doesn't but more that the expenses reduction that reductions an to run some reflection could light would be just be, But doing of

Catherine Mealor

Okay, maybe hike can great. asset color us around per Thanks. from could expand curve you And maybe give think or about margin, then and there. the forward give rate some increasing how thinking around kind of you margin some here, just the about us the outlook on anything sensitivity color any margin the some thinking

Jim Mabry

Catherine, this morning Jim. is Good

Catherine Mealor

Good morning.

Jim Mabry

Good morning.

So, got And fourth quarter. couple as said we and I you rate in margin so equal minutes today. and down points core few saw example, want of with if at was a margin growth the the I loan here, from poised for new that's we've almost a rates, our and as renewed to they're think basis both we're I ago, for QX, NII from And hikes. yields without -- that look

me. think rate look further any optimistic we QX, about we cuts NII -- margin and QX, into excuse again rising feel rate QX, as and So, increases, without I the

Catherine Mealor

and if under loans get we then an you've the reminder, the Okay, XX in as floors percentage to then that given forecast are and just for move how May? move great. And of or variable a as us update quickly we

Jim Mabry

loans it's XX%. is of Percentage variable, about

Catherine Mealor

does floors? -- that of And the and impact

Jim Mabry

Yes, floors.

basis on floors about currently, stand that where we is points no to to another and that So, subject XX portfolio, XX% portfolio that XX%. takes is longer of the

Catherine Mealor

it's may of a much that that reprice thing variable actually one floating, variable time? versus over so period on more is of the how floating Maybe longer immediately piece,

Jim Mabry

me on you Let that, get to Catherine. back

Catherine Mealor

Okay. you No worries. so Thank much.

Operator

from And go D.A. from the ahead. next Please Kevin Fitzsimmons question will Davidson. be

Kevin Fitzsimmons

Hey guys. good morning

Mitch Waycaster

morning Kevin. Good

Kevin Fitzsimmons

growth. talk more for Just loan wanted expectations broadly to a little about

you the comments, a very So, in potential the also observation Mitch, the in think earlier economic healthy, I your there's growth region but been is that pullback. made

big the in and I'm quarters of headwinds prior think been a I bit you that guys payoffs guessing and one paydowns, this for softened have quarter.

feel about that's just trying on forward I'm just how improved you looking sustainable going wondering So, about growth forward? about what going you because think if you quarter. think I'm -- what to guys this based feel pace it the production, paydowns, loan what ahead payoffs, you of

Mitch Waycaster

you, Thank Sure. Kevin.

with and and this how Let production kind to see I'll me and go reflect about bit pipeline. quarters then on of forward. talk that going begin quarter prior a we pay off

production to talk pipeline into production. get experience business which lines, we So, that bit $XXX we're see and we to million. up $XXX which of pipeline plays because prior we'll our million what markets minute across when year, And deal about good quarter and quarter continue our the million in begin kind a flow into in from to at discussion, talk entered just the prior pipeline reflect what experienced. have $XXX does in various I That the good I'll this that about it's seeing we in was the a the

we if So, production. in $XXX production saw quarter, go million this we to

which for that as that you bring about $XXX out the company year, mentioned just which we in would ahead $XXX quarter, of mentioned, production million. what that we And at Southeastern over If into adjust pipelines bring I that Commercial X% a you prior XQ, which the quarter. for $XX look was I looking about came produced back down -- the to in record million would the take Finance, of million, in if production, pipeline. That's

and from of another XXXX, which up I that really up it of and increased What the production we're markets is calls, we this In this books. and of XX%, X%. hold that was quarter, all X-X about seeing Our group to our be that XXXX up QX production, this HELOC, a said, across lines. QX of were QX estate family is because record we is product, business was for XX% company was prior was consumer of short And encouraging the I type QX, but our granularity. the million X%. on think prior equally mentioned $XXX the on important that encouraged I continue take I've if this residential in XX% non-real that duration like

about So, XX% there.

in less commercial XX% then was another small $X.X million. loans greater XX% than Another business business loans million in $X.X banking, than and and

question continue corporate And estate transactions. then owner-occupied Just senior not XX% lines, group, banking product geographically, a a from many C&I, which our ABL, real but -- all part different we C&I, standpoint, we payoffs hitting and to on cylinders QX. only commercial core was relative see larger reduced comes remaining to types $XXX say commercial type moderate and did production estate, equipment your of our million. Payoffs product finance, that quite the bit in by real housing in to

key under there, a XX that $XX million think about I average. was the point

which a for underlying And asset, pull last QX noted look quite in XX% QX. we of were felt around payoffs. QX was the total of high. you saw We the forward to on as we the So, payoffs sale we call, had some like might was payoffs, when where quarter, that in I moderation lot reasons at remember of those

that XX%. to reduced quarter, This

bit saw of a there. we So, change quite

point I the would We expect remain some moderate. fairly -- permanent than things at sooner are that the high say taking continue permanent to market, to expecting market would expected. as those

think basically we're that I the seeing across industry.

in continued and of increase would million I moderated remained at high about continue adjust at quarter. Commercial, some Again, pull you or you for production, But about that $XXX annualized. net resulted fairly annualized million this described, back about payoffs our assume which So, quite point, $XXX Southeastern if that or as well, growth XX% would albeit XX%. but to

lines. quarters we range And our good well evidenced our continue to geography our and We to growth this net, certainly, lines. with produce loan good given talent and product produce that our feel by to as of throughout the feel about markets this various look entered in expectations forward that. quarter, ability we mid-single-digit year number and ability would So, strong that relative last our to we be product and as in

optimistic fronts all those payoffs see of and good So, on begin to it's very normalize. to

Kevin Fitzsimmons

And a question Mitch. of just Commercial. Southeastern on Thanks Okay. purchase the I guess

in added it of like much seem too didn't it terms So, loans.

relatively that there such bolting your other terms more a lending just you you it's unit. So, to balance expansive on and in get capital? get and/or lot a are be in But big that that what Can and could opportunities larger of kind how can sheet type opportunities? small at there asset-based looking out of

Mitch Waycaster

Yes.

time, with about far fit So, and Kevin, business combining what asset-based of company additive out Commercial, company insightful continuing very quite brought it our the certainly time. we've the very talent a as opportunistic Southeastern for people period to Birmingham, and have area some to our known of based company to that we been as XX-year-old it's results in business lending is bring risk a be but appetite good our good very that's and already they question leadership model. very with that case the seen that short and the related that good was the to to very table. group, lines ABL align within of company Southeastern pleased And have with And certainly, that various to that we relative with Commercial in us

the certainly, seeing that and our with corporate within And and other fits lines fits I the bank. I well fits within it like business early the So, say, well company well core think on. and we're

is this that inclusive we continuing the to quite to seven as as regards whether members of in remain well. as additions at Commercial additional that add question, fit part to your well talent. looking to of in add lines, quarter fortunate business as opportunistic cases, some far As well as were nonbank-type certainly We other Southeastern model business

with for closely opportunities that will those business align model. we certainly, So, the to look continue

Kevin Fitzsimmons

Mitch. much Thanks Great. so

Mitch Waycaster

Kevin. you, Thank

Operator

will Please [Operator Securities. Demba Truist ahead. Instructions] next be from go Jennifer from question The

Brandon King

Hey, Jenny. on this morning. is Brandon King Good for

Mitch Waycaster

Brandon. Hey

Brandon King

anticipating interest to what for as you're wanted anticipating I more change a expectations I to rates rest come sort of some deposits? And money know on if actually as to deposits were was in the growth. what demand I market of growth continue in Hey, increase year. your and those the if wanted opposed the touch in accounts those but mix there deposit savings you're saw to quarter, of

Jim Mabry

is morning, Jim. this Brandon, Good

we what like occurs seems So, a reasonable that mean, in that it shifts we up, when mix year. throughout But in the behavior that looks you are mix, to some that to and we'll reasonable that that customers it as will growth that your it exactly question see hard these continue seems and mix. hopeful see to about rates does terms deposit And like some is will I predict. changes moving assumption deposit of what have

Brandon King

the Okay. And based deposits, that off beginning the saw as assumptions you of the higher beta have Has you where that far in what betas are lowered in kind as deposit of magnitude currently? rate those Fed the of based off of year increases?

Jim Mabry

recently. do like feel your changed a one. we So, than little couple I hikes, XX. about good at going And beta a we stand, we our stands number rate probably I of that's It mean, is a first input be to question for it's and that think lower that. where haven't the deposit conservative

total here sensitivity not of if you generally deposits cost that's we have a hikes to the So, plays I flattish see of cost XX look of basis look again, at we'll feel out, influence. but around a expect and lot that is behaving of these at -- it rate in our we sort near-term. mean couple see points, first conservative how our

exceptions of lot a in field. pricing to the seen haven't We

if an and of base it's deposit to core protect you to grow asset, company. deposit will, we're important it. and going seek again, value the So, that We

Brandon King

this lastly, included closed rest the branch year? your the last curious actually then plan the Thanks. that do that to year quarter. you going that's see three saw I branches and year efforts rationalization compared in was have to where I were And expenses for of lower if in

Kevin Chapman

there be good will Yes. done. Hey, is there are that branch it's further morning, rationalization efforts -- Kevin. further And some

lower expectation the And in and about is on some of equipment. comments that the occupancy included

services as process much look we've what the ongoing to of them, to look But identified is of ways that scale require Some and need just some them we of able that's implement our of brick-and-mortar branches, to those to effort yet may other not be be at markets as deliver proper -- to actually well at of certain we in what we closing manage may are as in an markets. the meet as identified. technology be going how the level to needs banking and we

at ongoing be And yes, looking we profitability forward, So, branches, of of as will that the specifically, one effort. be those will initiatives. an look

Brandon King

That’s I much. you all very had. Thank

Mitch Waycaster

Brandon. you, Thank

Operator

conference question-and-answer any to session. remarks. and gentlemen, to turn back the would I this for Mitch Ladies like our concludes over Waycaster closing

Mitch Waycaster

who you the next to those the soon. call in South appreciate Thank Gulf speaking Conferences We plan again May. and you, this and Davidson interest forward the to and thank joined We early to D.A. look morning. in participate the

Operator

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

You now disconnect. may

Renasant (RNST) 27 Apr 222022 Q1 Earnings call transcript