Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Renasant Corporation 2022 Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this event is being recorded today.

I would now like to turn the conference over to Kelly Hutcheson, Chief Accounting Officer. Please go ahead.

Kelly Hutcheson

you Conference us Call. thank Quarterly Renasant and and Webcast morning for for joining Corporation's Good Participating of team. Renasant's this executive in call management today are members

Before actual risk or in and our There are anticipated many will note results that other forward-looking differ uncertainty. we the could materially factors this the cause be involve expressed during to forward-looking call of which statements, many begin, please results expectations comments statements. that from

rate Securities data but fluctuation, other recently include, Such link Commission, has are to corporate the which performance our to, interest been and including release, changes, not and release's our regulatory under news factors site, factors recent tab. limited portfolio filings and our in at discussed www.renasant.com earnings press market posted with filed the Exchange the

results undertake statements of We revise events, to or disclaim obligation the specifically occurrence assumptions, operating we time. no to changes unanticipated any update obligation and over to or changed reflect forward-looking future

In the addition, to morning earnings reconciliation measures measures non-GAAP in may some be measures of the found measures. we financial non-GAAP can financial are our of comparable A GAAP the most release. discuss this that

Officer, over And the I turn Chief our Waycaster. call will and President Executive now Mitch to

Mitchell Waycaster

We you your interest the appreciate in Good Thank Kelly. call morning. Renasant. joining you today and

continued operating year put past Jim to of our our to successfully company. results our deposit attributable benefits the each opportunities and a customers core proud other and I year I growth core a for to on changes for environment solid base. discuss and reflect the am adapted successful Kevin the XXXX loan want very expansion, that and Before and of management, in this first. expense the fourth team We good to quarter, margin earnings ahead. produced was

of worthy well family. a also end liquid management a and the contributions year XXXX. balance us the the their strong We credit of for a are Republic forward positions look that sales managing history Credit and team profitable welcome we with teams assets and from to sheet the to portfolio Renasant in Business The ahead. excited We have and years to

uncertainties economic to present, net attractive meaningful growth migration. in continue markets show and that are we in While operate

optimistic look the with you. and forward about the are We year sharing results to

I will to now Kevin. over turn the call

Kevin Chapman

Thanks Mitch.

fourth quarter Our or $XX.X million $X.XX our share compared $X.XX in will $XX.X in later or earnings the we per diluted were excluding quarter, diluted per remarks. million, third items to which cover certain share

that specialty acquisition our of fourth our with advances the million Our of adjusted for of Republic our announced completed strategies and our $X.XX. which XXXX, RBC December added earlier recently reach on EPS diluted Business acquisition loans the on Credit businesses. lines We we in scale XXXX, of in in of acquisition or $XX.X date some quarter this of was commercial finance consistent more building transaction southeastern XX

from RBC in our beginning Earnings results in XXXX. will included be

this with and on that in positions believe we to the volatile deposit will deposit acquisition basis. in continue our But increase. it driving environment. and don't provision expect nearly quarter, an $XX.X merger pressures anticipate deposit income quarter. the these increase term expense in and another quarter with Competitive quarter coupled increases boast our a our We the of near our base right costs deposit us costs loan third funding increase strong legacy However, an manage in costs abate strong million this interest million expenses from still to the core to of reduced business, respectively. on linked interest Fed this results and In $X.XX quarter pressures by pricing our growth $XX $X.XX rate drove impacted associated of

And quarter. solid were Management Markets, continues Our earnings Solutions, quarters, volatility. consistent mortgage with our and contributors recent Insurance lines businesses Treasury of to Wealth to this Capital division our experience

the volumes in see unpredictable. Nevertheless, this that some year, normalize, are mortgage we investing division. model. margins to response In we remain expenses still the managed be we indications volumes to headcount decrease are of have and during in expect our important prudently rapid beginning our Although continue production strong talent to the is down team overall while part an for our to business year, in

expense link Non-interest with expense expenses was our essentially banks million in acquisition basis. to we $X.X million merger of to We issued and guidance the related regarding associated NSF FDIC’s fees. flat recognize quarter on of a $X.X RBC, recently incurred representing

previously to a reimbursement such XXXX. voluntary in of charged We make customers expect fees to

adjusted lift coming our items improve in coupled revenue margin non-recurring at quarter. excludes which the fourth With efficiency with income expansion the for continue XX.X% to our from ratio, expense expense discipline, and

on commitment improvement improving and the of year-over-year Our basis provides link to evidence quarter efficiency. operational our

immune pressures somewhat We RBC. increase to before expense in of are expect non-interest not to inflationary and consideration XXXX

with and operating pricing, deposit below efficiency However, goal maintain with discipline, loan and of to XX%. our we appropriate continued an ratio expense, attention

will now call Jim. the I over to turn

James Mabry

Thank you, Kevin.

Renasant the part As nearly $XX.X strong in from footings organic the in through loan growth. of RBC quarter $XXX to not deck. up million acquisition we another walked $XXX Total million earnings due of slides loan million, The I will reference while quarter’s has added are growth. loans results, in contributed legacy large

deposits of significantly of annualized loan growth the the represents an and RBC, third Competition of $XXX growth brokered deposits We in from bearing markets our in quarter quarter. deposits from decline acquired this borrowed a loans for $XXX experienced we fourth million November. XX.X%. in picked and quarter month the non-interest million within Excluding rate the up time

and base of required deposit capital capitalized RBC. strength our of be to to core and share the regulatory decline excess The the attributable is company's of minimums in All quarter-over-quarter are considered acquisition our capital strong. ratios well remains position. directly position overall liquidity The

total driven RBC. part a We've the increased recorded which loans and large ACL million loans of of acquisition provision credit to The million, from of $XX.X percentage RBC, X.XX%, charge-offs a experience $X.X million. by for acquired includes of quarter-over-quarter net $X.X as in

are XX. metrics XX pages through shown quality on Credit

Although million $X.X quarter-over-quarter. interest past criticized were remained up, asset Net dues measures nominal. charge-offs income relatively and increased non-performing moved steady. Net

purchase accounting Our accretion, and loans recoveries QX. XX core QX, was basis low from which interest X.XX%, margin recognized on points up in and PPP XXX from basis income points excludes the

pricing us this The points basis cost to quarter. deposits more from XX heavily pressures of quarter. The basis impacted deposit XX increased QX points this

We increase continue persist funding expect competitive coming to will quarters. in believe pressures XXXX costs these in to and the

The quarter-over-quarter. is is down mortgage million our largely income Non-interest $X.X division. to linked decline

QX. may for gain. sale million a we that our third of quarter You in There portion the a recall $X no sold such and portfolio servicing rights mortgage was

declined the of remainder in decrease and mortgage for quarter banking income. Additionally, accounted the in the volumes

Non-interest expenses third quarter. $X.X declined exclusions with million the from

committed efforts We are to our this proud team's improving of manage operational environment efficiency. and expenses remain in to

However, expenses these from to expect persistent increase we given inflationary pressures levels do in market. modestly the

to call over I will the now Mitch. turn back

Mitchell Waycaster

Jim. you, Thank

the provides attractive a capital tenets us having portfolio banking, retaining sound and optionality quality protection funding, Our basic borrowers and focus of against diverse position and loan granular remains core on potential headwinds. a affords that maintaining from high industry

turn now operator call will Q&A. for I the to the over

Operator

is question-and-answer from here James. will go our session. Mr. Raymond your Instructions] Rose, line Rose come Michael begin And [Operator We Please muted? with first will ahead. question now the

Catherine KBW. ahead. right, go will Mealor from come Please our All question with next

Catherine Mealor

Thanks. Good morning.

James Mabry

Catherine. Good morning,

Catherine Mealor

I'm margin this, banks, you're wanted about thinking Thanks. quarter’s on about and we've and lot I could as provide so other move margin far. trajectory? we reports decline you the see us of margin. a seen thinking to the also NII if an pretty how in about the are our How peak year. this A forecasting thinking just through significant growth it as you of next terms outlook

James Mabry

This Catherine. is morning, Good Jim.

So morning. good

know may you, But wasn't, margin you So about be it it. helpful goes data to it if as from don't think I certainly the about that was to if we here. peak. close it points of couple as A think it where was

for December for quarter NIM for core I X.XX%. was was think Core it November the X.XX%. And was So, X.XX%. NIM

outlook I for down surprise than is the characterize probably better no as story the XXXX. to Our to slightly XXXX first say to that slightly but Catherine. would for say on second probably that half down, would I behaving you in NII for And flat to XXXX flat the of it I similar half. is for margin would behaving

Catherine Mealor

Have cycle for And think be changed other the been will the higher deposit what your beta you cumulative on over you view everybody. costs for have Renasant?

James Mabry

the So Renasant we're for using loan XXs are about betas cycle deposit touch a the in for low beta of that. and than higher

where that's we we're from six So that's up probably using. but Catherine, ago, what were months

Catherine Mealor

interest Okay, that's beta the great. correct? bearing, And on

James Mabry

That's correct.

Catherine Mealor

in lighter expenses. I efficiency that What to you're much how over you've you that to outlook expect of comes in mentioned ratio prepared year? you if of expected? appropriate moving a know this level. And maybe growth remarks then have flexibility XX% also managing from that this range is growth there think a that than do kind revenue in your think there Is And that about is goal? you great. Okay, expense

Kevin Chapman

Kevin. Catherine, Hey,

So hey, as at we look morning. good --

as them. that in of So -- that margin have not return as And the helped the much so margin. to well that but our continues bring one rates to the help to seen And at eliminate one us as on couple look just over I through revenue again, our be maximize back expenses, we think main -- you've last into back initiatives. of quarters, expenses, of

in efficiency mid-XXs. Our ratio now the sits

inflationary pressures going on outlook, expense our we're at our look expenses. we As have and again, to

reported baseline, close we But X.X%, fees, of out expenses for the million a if NSF $X.X So if on There's some just expenses. in in baseline, X.X%. refunding $X.X some take using are a if we your the non-interest million using think as there. merger quarter, as $XXX.X there's just that to items you're X%, expenses that non-recurring called our you there's you're again, up that

kind items, the to to If be Renasant all of out closer just going That's you before to And run RBC. core back increase. are of X% of that our is expenses X.X% expenses. those legacy rate

progress. that we of lot have one don't XXXX. from returns. if So in momentum in our on of There's adjust, of expenses It main a revenues ratio. us to pressure the company. think we We've lot a initiatives, at our subsides some continues around It expenses remain adjust And revenue. our on energy headwinds and as accordingly. maximizing of There's made look we will that lot a detract efficiency our of goal doesn't will

Catherine Mealor

Great. All Thank right. so you much.

Kevin Chapman

you, Catherine. Thank

Operator

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

Michael Rose

Hey, guys.

that. Sorry about Morning.

wanted Just Good touch of mortgage. on morning. kind to

Just get wanted but to of headwind the, we'll of to hopefully, how see be on been mortgage mortgage margins, of couple broader expense it’s higher, down fully just and some thinking a obviously, touch seems It lot given should ago. expectations about mortgage. a year. to But and on in years a But just we It's sale revenues, the X% the the on of business, like the wanted about absorbed. lot back headwinds, gain origination side, on here. here, rebound some both half the then side, the color on commentary for has

the if remarks. Sorry, prepared in Thanks. it I missed

Kevin Chapman

mortgage. X% good. to that And of go couple ago, as we of right, is You're than revenues you're higher was the if look back, mortgage much Look, a at as percentage today. a years X% it you

look of expect total revenues, basis, if you on revenues to at back pre-XX, revert average to a X% revert mean. more mortgage normalized and go that so we to If X% represented it about mortgage to we that back back to

And created counter a still are that volatile. should with is opportunity The or surprise still to that time. reckon that's bit volatility. trend little the hiring. disruption be. a think a mortgage volatile markets comes opportunity what a seeing actually that that's for that don't secret we It's recognize in maybe we But I the I

We're just of opportunities seen we seeing year. since pipeline to the includes in strategic hiring hiring We that end have our look our trends the of have the the since the some in be XXXX. headcount production hiring reduced continue We to reduced And of beginning strategic that. that opportunity mortgage grow XX%. But year. the beginning about our or as tight. we've see at Margins continue we some positive on strategic done that the And we'll of headcount side. XX% some about

Our right year. now. of $XXX beginning mortgage is about XXX the at the pipeline It’s pipeline – about

some feel inventory. variable is about rate, on production with that as and are now. But where time, we're there those product to, all little again, So come revenue X% of and signs coming over of back. volatile mortgage current total is just position think right we back for I again, in to look it's that to range we variable feel positioned that But on X% good from its And And going range. it's and bit over back mortgage. X% revenues a product,

Michael Rose

just missed If healthy. in slide just a this benign? of this some on down that the pretty Or give reserve surprised the either pretty the reserve given construction. I I look which more I Thanks. move, and quarter. a like reserve then the more And it just or XX, a was proactive wanted to are metrics Was color pipeline conservative the you're your was if kind I helpful. are dig something in there credit space, this actually your Very sorry, greater looks at you again, in in You I of was guys a in, build economy? and commercial is into about little Can guess built still seeing just in build? broadly the

David Meredith

a XX to this level And and you a kind you from kind legacy $X.X can Michael, down legacy from Renasant a I XX. David. -- of can into quarter-over-quarter give overview is see of million breaks $X.X build the page Hey, first I'll page address charge-offs high of good million. But standpoint, $X.X you provision direct just billion it morning, at

on RBC, quarter. our went pre-RBC if X.XX% X.XX% exclude we last to So quarter from this provision a basis,

really from quarter-over-quarter. in that commercial PCD, non-PCD flat bucket, the the being that's a and non-PCD loans related increase standpoint. what that in was it basically, RBC The quarter-over-quarter Renasant difference So provisioning PCD, to RBC seeing that is build you're that provision for legacy that and

Michael Rose

is what I'm of moderate know for have classes the And I how missed you asset growth. giving terms more is, prepared growth And more missed Mitch, Thanks. I is pipelines remarks. in just of what you guys I much and, opportunities? back on market it. pulling me. for finally, then the the moderate to appreciate what, either But mean me? in Sorry, maybe it maybe, guys certain sorry, versus update in Thanks loan about the that. that. clarifying talked I you

Mitchell Waycaster

prior best Yes, a indicate from $XXX that. the moderation, is seen beginning maybe And look Michael. there down of have million did the the maybe $XXX look that's with the have quarter forward be prior that started million, of at discussion would at pipeline we to way as we quarter. We quarter. We the and XX-day

XQ $XXX for $XXX The that was from And production million. down million. moderated

net So occurred. expected what as of mentioned growth. in Jim million we million production $XXX that And, yielded, course, $XXX in earlier,

as Panhandle, granularity geographic about production. some a the to from important you produce came lines. XX% business our here million that our our markets, corporate I'll from Georgia, thing thinking commercial business various Central Florida, think I percentages and XX% of give ability lines. from XX% XX% Tennessee just in $XXX Alabama, the both XX%, as well Florida in came from Mississippi,

it like So to geographically, moderate production. continues still we're while pleased say with

our that is small just the important, of geographic family and I is And the four in would larger XX%. And less granularity type XX% owner to million in be represented just about then ability our and the size XX%. than $X.X I $X.X $XXX credits as a represented types. earlier, consumer, to that's mentioned continues million produce our be C&I about occupied which was think core strength credits million another another as credits, business that one equally markets, that commercial which of to more loans

represented XX%. And quarter, there course build corporate and lines, then addition which this grow our an out that to as we've of had and we, past our specialty continued

produce. many continue we So relative ability to to cylinders, our different hit on to

past saw what should And year saw forward, again, thing the the last on while we XXXX. below quarter what moderated, production about in two XXXX. saw average that payoffs. think at quarters. I other we in The We saw mention so well payoffs we've below is And for has we production pipeline while going here this

certainly So as in just about ability we remain markets. mentioned underwriting in business remain the And continues in well driven lines, markets, produce as we optimistic pricing. disciplined opening I in-migration that the our to our comments, talent.

definition education, a we it's do economic business where I economic at past testament development that's medical looking a of just government, But previous do exists all think, that not today. we that and manufacturing business. and to uncertainties where And good talent. the distribution, also our certainly activity

Michael Rose

appreciate the I color.

high is quarters, XX% balancing like ballpark? puts a the the from somewhat and digit in single So takes something growth this annualized

Mitchell Waycaster

Yes.

type hard of it Michael, you But that would we're seeing to variability in that the component production. at pipeline the So if and think conclusion. I payoffs. be specific you the But -- it's to and look and, mean, quarter-over-quarter, I the the that pipeline, current given think, I lead change and just

Michael Rose

taking for questions. Thanks Great. my

Mitchell Waycaster

Thank you.

Operator

go [Operator Our question with Instructions] Please next from Wendler come will Thomas Stephens. ahead.

Thomas Wendler

good everyone. Hey, morning,

David Meredith

Thomas. Morning,

Thomas Wendler

us in of Can bit past a give any a saw XQ. up tick color loans in you two there? We

David Meredith

is David, color. of Hey this A Tom, bit little morning. good

part for amount us most that of the brought made have when to current the and the of look when we consistent in prior of The up that the first January. with was loans that For kind quarters. get would where at first we turn was been we we year, paid back of

think term space. this So was long trend. consumer a it's a we in at It -- the point, don't largely

Our commercial quarter-over-quarter. book relatively continues flat to hold

largely it's we on. turn return in that more to the our normalized saw Again, quarter, of past driven So consumer. dues after to number quarter

Thomas Wendler

And for All of you. right, just question here me. bit thank modeling a a then

With expect? purchase accounting Can kind give in XQ. me about there, any we acquisition, color just thinking the of RBC should accretion you the I'm what

James Mabry

will this through There say of amount terms would XXXX. be material, be as go is some Tom, be I Jim. not would there will some that. likely it we the in of but

Thomas Wendler

guys. And that's All right. all you for Thank Thanks, that. questions. my

James Mabry

Thank you, Thomas.

Operator

session. this no to remaining And remarks. any I'd conclude our the like turn conference Waycaster over Mitch back to will question-and-answer questions, closing with for

Mitchell Waycaster

Forum interest in joined plan next to CEO welcome week. have to talking forward again next call the that and -- your today. Thank We look participate you the to soon. Janne all We

Operator

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

your may You now disconnect lines.

Renasant (RNST) 25 Jan 232022 Q4 Earnings call transcript