RNST - Earnings call 3 2023 | Renasant Corporation

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Operator

Good day, and welcome to Renasant Corporation 2023 Third Quarter Earnings Conference Call and Webcast. [Operator Instructions] Please note that this event is being recorded. I'd like to turn the conference over to Kelly Hutcheson of Renasant Corporation. Please go ahead.

Kelly Hutcheson

Thank you for joining us for Renasant Corporation's 2023 Quarterly Webcast and Conference Call. today of call team. executive this in are Renasant's members management Participating

risk we many be call involve that please forward-looking uncertainty. our which Before note this of begin, comments during statements, and will

that There anticipated in of in discussed recently factors recent other which and statements. Press performance the to, portfolio under News the other Exchange Such corporate our changes, could are the Releases include, with including has or rate our the and funding many the cause results and filed our Securities sources, www.renasant.com are to materially regulatory results filings release, the to in at expressed cost changes Market site, link but mix been our Data actual interest Commission, expectations factors posted and earnings tab. from differ forward-looking fluctuation, limited factors not

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

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

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

Mitchell Waycaster

and expense markets and We are remained and and economic balance deposits Thank generally show that strengthened results call and The good you, solid have I in-migration in from core in operate joining increase XXXX. you with has loan morning. Kelly. expansion. net benefiting control. we The quarterly quality sheet our steadily which in resilient your asset am Good the appreciate interest pleased in growth, Renasant.

should continue add the positioned and allow in will us in advantage efforts opportunities take footing Renasant's that some emerge. to to We our markets of solid South best financial presence. are to well of the this we'll

our company excited turn over York we will I provides and New for now to Kevin. Stock a our part the now believe Finally, greater we which Exchange, visibility shareholders. are be call of the to

Kevin Chapman

Thanks, Mitch.

were to million $X.XX quarter. earnings in or quarter compared the or third $X.XX diluted share per million Our $XX.X per diluted second share $XX.X

Our loss sale of $X.XX of after-tax a the our or from of included portfolio. portion second quarter $XX.X securities results an million

interest income million a basis XX increase linked interest increased another net our growth, a income. by down with basis, to of Breaking driven Loan $X solid on loan over quarter quarter yields. coupled loan point

However, both quarter, a basis. interest deposit while expense continued a costs in market-driven impacted rate Renasant These quarter mix the underscore and increased, increase in pressures this our million loan core and linked they importance on pressures leading and environment. yields funding pricing on unique competitive deposit pricing deposit of this to deposit $XX.X to not are

base. have our even deposit has to We worked and core preserve team grow an diligently outstanding that

on linked During million wholesale the allowed quarter, on pay respectively, quarter. million, $XXX deposits the $XXX we million $XXX broker us by basis, quarter grew and funding which reduce during a down helped us core FHLB advances by reliance the deposits and to our

will and deposits priority on our a remain funding in unchanged focus cost growing core future. managing is the Our and top

of securities quarter, on quarter-over-quarter. million loss in the $X.X Excluding second sale decreased income the noninterest the

of wealth markets, to lines solid solutions, Our and businesses results. insurance continued treasury deliver capital management

in seasonality, Mortgage the second sale gain $X.X quarter. inventory. million basis and rate $X.X were declined played by $XXX expenses along margin Noninterest in areas. our million volume quarter-over-quarter, points. the million our decline housing by other role a savings from decreased in with Interest of and Income only not also XX second decreased modest on but from rates mortgage division declined Volumes lock increase the quarter. impacted lack from the

of ratio down ours. ratio to pressure but a goal put was continues on managing to for our compression efficiency Margin efficiency XX.X% this Our be quarter. the continues

call now to will turn I over the Jim.

James Mabry

you, Thank Kevin.

walk XX. some deck. June with growth earnings $XXX wholesale modestly experienced The quarter's we allowed down us sheet in from strong balance the excess will As of cash pay contracted the together deposits, I We utilizing which from about to results, slides funding. deposits, million reference through excluding broker

quarter Loan growth X.X%. annual $XXX in million of the and second was rate growth an represents

focus We our continue to on liquidity.

see and and $XX,XXX, As position on granular. deposit you account is can average material deposit X, strong. Slide is overall and core are the company's no and The diverse The remained deposit liquidity X concentrations. base there base

of ratios ratios minimums of capital each be regulatory these to all well-capitalized. X, are excess And from prior considered quarter. required Slide Referencing improved in the

and build a tangible ratio the book in common share. also equity per We value modest tangible experienced

credit Turning million, metrics which loans an is recorded of $X.X points, commitments which recognized as charge-offs the to credit basis million Net Page expense. total flat in recovery losses represents of a We and asset unfunded $X.X $XXX,XXX, presented noninterest X.XX%. Credit of are and X a quality. annualized loss of a at provision of on X. ACL were rate held percentage on

from assets were and improved previously loans quarter-over-quarter relatively were each as X is criticized improvement loans loans. anticipated, past unchanged of nonperforming no quarter second in disclosed credits. Both by and in driven points and of basis the resolution XX nonperforming at dues The Our resulted loss. well total collateralized the

credit of environment. strength remain While current pleased we with the portfolio, about the in our underlying cautious

bank. and order we to mitigate Our potential early problems attempt to to in high underwriting remains, to commitment the loss standards identify

Moving profitability, beginning XX. Slide on to on

decrease. of to net the basis. $X.X net a in declined the Excluding quarter key the on sale mortgage after-tax linked quarter, income and our are income securities on million loss the declines division Pressure interest in drivers second the on the

Slide side efficiency linked-quarter expense as flat remained ratio on on can savings revenue that such offset with pressures basis. on However, successfully on the see a our XX, the the adjusted you we

purchase X recoveries basis Turning to net Slide XX. margin, down interest and which from excludes Adjusted interest was X.XX%, points QX. accounting accretion

noninterest to pressures funding highlights to costs XX and continue for yields than yield. offset income expected deposits term. pricing points in X.XX% within we The more the on quarter. increase total were to and basis believe basis the Competitive XX will points, Although expense. loan of persist, deposit touched up pressures increase in short the cost increased Kevin are the

our positives in within expense The quarter. the revenue diversification streams control and were

headwind, While environment base is managing the a committed leverage we operating and remain a remains expense the to rate improving priority.

back turn will Mitch. I the to now over call

Mitchell Waycaster

Jim. questions. the proud Thank team of I very XXXX. our the you, operator I the to for over so and in am far turn to results efforts the will made now produce call

Operator

James. The first Michael be Rose, [Operator Instructions] will Raymond question from

Michael Rose

from as loans industry. again and outlook. want kind frankly, your of little kind us of we just telling on remind why your about generally And of so more growth in then start given from has customers stronger seen fund-ups? you next your you being cautious eyes? you? little around bit maybe I just in And bit where credit, your just both more own maybe just the construction strong backdrop, cautious? what and The economic a we've just views to are than expect, many peers think from what a what the maybe Can year, stand has should across a And been been, the growth we just

Mitchell Waycaster

backdrop, you pipeline talk a construction then start the to ask with mentioned. specifically start which with and me little about production David to Let I'll I'll

pricing. occur compares moderation Just beginning $XXX and quarter $XXX definitely perspective That But the quarter. we're where million now pipeline. prior to in with continuing put at the underwriting this pipeline, in pipeline, is touch production XX-day both the pipeline of and beginning in to kind on million

ability So expected, fund course, relative of just credit. That -- incrementally pricing to continue we've seen this in quarter-to-quarter. I would throughout and to as and discipline some we our to say is what by next moderation year, of the then extension would demand. underwriting see driven I

in resilient some markets. that we vibrant, good, and the comments, With opening said, operate very I as in mentioned

relationships. in serve loans grow and from in And We also evidence this growth quarter. continue that's to deposits our

quarter. $XXX $XXX back on down compares QX, is to in production $XXX in like saw Just this governor this year, growth. $XXX ] a the we calls, million more the net roughly in we the prior on that QX. mentioned to had And this quarter was saw but million what we in $XXX first That's that from million, produced or million quarter net [ quarter, we payoffs of I've going And saw back million prior $XXX in pull payoffs. Actually, really annualized of million. production. as X% That slightly

about So had the QX XQ. was little this a quarter. in X% elevated. That We versus our net impacted performance X%

mentioned from Panhandle; Georgia, from from and And and I business at the forward, important the our XX% commercial to example the and that regions, Central you Florida; would continue that this Alabama production, quarter, to just again, I Tennessee the say prior next granularity the all remaining look as remarks. to lines. from our from in continue the and give the one and XX% distribution Florida his know way. types came geographic of earlier our business of in our meaningful lines, million of To Jim XX% quarter, each is that $XXX credit that and as from that, the contribute those, Looking loan XX% corporate usually 'XX, another likely Mississippi; they an is and expectations a XX% is quarter each equally we into size markets, we of for we and referred when the do see we this thing move

that, million family, and take loans. the about X-X talking that we $XXX granularity that in types product, again, you books. on keep of on And duration both our in and deposits see XX% short that consumer, XX% from production came But of we QX, if and the

and in credit in is Another past, and $X.X here proud XX%, we've and of the million. and banking, lot than of very small less this, had we're success business a that's business

And commercial been XX% commercial $X.X pleased real corporate then equipment ABL, banking remaining will larger C&I, commercial credit very is with. than real finance, estate. which we've factoring include operation, group, C&I, XX% in million, owner-occupied, estate, our that greater in Another

say, type, very granular. All and to geographically by

prudently for company. many simply the but of average just size our diverse diversified we next -- We continue ability on loan portfolio, with and a different hit of to about David, to quarter. remaining and our total Our specifically cylinders, do construction? comment in our evidencing while ability disciplined it's to remain produce in certainly you on forward pricing that this going But optimistic want underwriting. -- said, $XXX,XXX

David Meredith

David. you. is this Thank sir. Michael, Yes,

$XX XX% XX% would led kind That development and we from of million about the moderately Our is number off quarter. XX%. It our where to change Historically, about not be. or expect construction we That to and growth. [indiscernible] quarter-over-quarter, of that this just loan bucket to have went seen. somewhere XX% about construction time far changed our development from over bucket

out an not line standpoint. it's expectation So from of

Michael Rose

detail. all color. appreciate Great I the

down assume talked I Expenses Any down I has talked that the of or working less. Just revenue you've so kind were back have some kind guys little comp you mortgage-related do bit, as little it incentive of flattish. you expense Q-on-Q of guys are things a kind about a know working XX%. kind with being of front? about a and efforts a on? bit that anything But follow-up. separate little bit specific you're the towards migrating efficiency ratio on of to

there revenue to get wanted of industry. Just for there that out the update just headwinds the given are some an

Kevin Chapman

Michael, Kevin.

So the focus our on expenses, really changed. hasn't

the categories look see the XX%, If and of comprise which they're decrease, benefits, you to at expense occupancy you employee expenses. of you our and can comprise XX% equipment, saw collectively, both where going salaries just

our we revenue -- revenue was -- we where focus that's So the seasonality do QX, down. have mortgage did In is.

down. So expenses, are mortgage commissions mortgage specifically

item, at look but was salaries About line the $X.X of bank. that it's $XXX,XXX you if expenses not and mortgage. that's core down employee benefits all from So million,

of count a day there. there's to $XXX,XXX but differential is going mortgage, attributable be roughly that So also to

and benefit, compared salaries differential. you our $XXX,XXX just to QX, differential or our in non-mortgage it's If a core going be add core down day employee and from day employee just to bank the salaries count another --

on our reduce and So efforts and contain made control there's real to traction expenses. being

and we an that don't As the on that is focus out, you announced We times our going we're look expenses, think in I our announced we've same. to focusing multiple be see numbers. expense have still But initiative.

benefits will our seasonality some on an efficiency the our to have has to where to to continue we be expenses. the reducing attention on it our If revenue that's to But going occupancy comes been our And that. of you focus lie. focus expenses. the side we'll -- When just is now is is and and it. there's again, quarter-over-quarter, we look on But just reduce focused equipment. attention ongoing and employee of just where majority because That will salaries effort expenses ratio,

Operator

Next question from of will Mealor KBW. be Catherine

Catherine Mealor

you the margin you And what just big do on of is into picture, thinking what's your thought we outlook margin just the into see the as for the NII should next margins next I wanted about year. maybe to potentially think And and into move ask margin when next and think also you're bottom? and the where for kind -- growth how about year. a how really, quarter

James Mabry

Catherine, this is Jim.

So start with other think think or about it performance the to want we've the I how quarters. do very balance but to of grown profitability of proud sheet. I as margin couple we you last know, in really numbers, metric deposits the see here we're

think our about growth in was core I in annualized. QX deposits XX%

certainly, million, tried leaned balance by sheet March. funding. into and lower $XXX and those got very wholesale reduce $XXX to the a million goal, like everybody's Loan time, early a basis wholesale the since attractive so were And rate points. sharpened And focus to we've Federal because events And lines or XX will our Home was a sources. that others, remains focus. down on only that about that that on we've And Bank we, in not And remains

And focus to now broker lower the that deposits. in remains some

we X. goal the over I next over few little down that and essentially the in reduced get to quarter, $XXX that a to our million quarters think

that we looking we as there. a say backdrop continued focus a as then about and to for because start of pressures see margin a -- the with sheet margin. margin the I'd comments, So balance couple do on we And think will

margin. will think follow that trend, certainly, I saw seeing to QX margin QX, of mean, a but think will we compress terms is in that guess. I the will less QX I saw we more NII compression at help we what will expectation QX, QX of NII to bit bit, we than look sort follow the margin. that I as to probably were growth and my continue than but directionally a the

see 'XX, As really know. it relates as we Catherine. signs, forward It environment to you some uncertain an to remains looking encouraging in

where tough was by things the quarter So struck things sort in one predicting decline. But is the of of thing. our were a might that we moderation bottom in NIB

see decline So meaningfully in QX to the a noninterest-bearing saw was it quarter, we from we balances did less but decline QX. in than

that in us guess, like give when we'll things stabilization too, that might it So but hope I some 'XX, to uncertain call remains that see be.

Catherine Mealor

on Great. loan How about repricing.

of 'XX think -- it -- are repricing can can loans as know you fixed tailwind kind talk when about of we all looking that you there 'XX. we kind we're about paint -- an that year? rate to be and the for, might I upside that think for see of throughout margins? increase over next to your much when maybe Is the we what of going how bottoms start amount any the loans And

James Mabry

of So a couple things.

'XX, are QX And think X.XX% little I over lower rate million opportunity fixed about a I repricing Those think $XXX the next. and out of the reprice got and loans in a for or terms X.XX% slightly X.XX%. loans million there, $XXX in loans we've like rate. or in then roughly will that X.XX% carrying it's

some So opportunity repricing there is there.

Another sort Catherine, quarter a helpful, giving in prior look thing be not but calls, we've of just a about monthly I a you think look. monthly look, may talked

So tell for I quarter. at loans that would you you if the look repricing

for talked just New the what X.XX. the quarter for of the and X.XX%. side the interest-bearing of was for were month, and pressures, it X.XX%, about But we other the that of terms renew month is was September X.XX, were in deposits

in some look see those. we are So capitalize still to certainly But persist. and you those again, repricing opportunities pressures 'XX, can there on

Catherine Mealor

out. just question I'll maybe And back one then margin and Great.

beta I targeting cycle. you're a see? still you'll over that XX% where the think past, you about in -- about talked you've had Is the You deposit or interest-bearing think

James Mabry

exactly, tried every be now, We've terminal trying still the on that market not Catherine. deposits. a hit interest-bearing in -- to conservative we're beta But we be conservative right we're time to modeling mid-XXs the

Catherine Mealor

more next like would versus you hit be quarter. probably 'XX Okay. would But -- that that mid

James Mabry

yes. that's I think reasonable guess, a

Operator

will Hovde of Next be Bishop David the from Group. question

David Bishop

real to I that, with funding stick wanted quick. the topic

maybe Specifically, of deposits deposits next -- just cost quarters? level couple level of absolute over And curious maturity what were. the brokered of your the

James Mabry

this Jim. Dave, is

rate that's it, majority we I million, have in the of And $XXX call $XXX in to think say want I average I around So -- were quarter $XXX And like, deposits million would deposits. it, end, think I off. million of carrying at the an in call QX, will got And we've X.XX%, the pay ability around brokered. to say -- matured within X that quarters, roughly vast of X.XX%. next the brokered

deposits on putting cost on low we're new So at Xs.

that as sources, some to that, is we in benefit, what income plus strictly we sheet point benefit greater certainly we next on -- back want the at no certainly from we're but balance we alternative here see just funding bank. that like has benefit a a statement definitely virtually really we're So -- reliance strictly and quarters the few funded being core having

David Bishop

and Got perspective, then the further target a funding slide appreciate I [ near-term assets a in XX%. securities reaching cash total about a that's think And you to ] that? down for Do to from it.

James Mabry

I to to want fund so where will think we're close there's David. or -- pretty $XXX that in we're we in that to terms pretty loan million close, growth, be another of help be used but fund Maybe cash there level.

David Bishop

of quality. front shift" the into loans credit like the migration to the that about XX-days of from It "mix occurred sort was maybe talk some turning maybe nonaccrual, some then quality due And this quarter. past it. the the Got looks there from maybe credit

David Meredith

is Sure. this David. David,

we're primarily of identification those, chain. for up that a and past really that loan good made quarter on believe, good to virtue. X very continues market last credit One value quarter for was position. days didn't for taking were sale was of just due They're that a housing As to by like asset senior really a new migrated for that that asset XX We loans. loans the underperform. have that comprised credits we asset It just a that position an

mortgage properties. seen are Those other property mortgage The with as values we've holding. still was

good we're value a in we position So X. believe those on

So it to is properties. related primarily those X

Operator

Ghent question Stephens. Next is from Instructions] [Operator Jordan of

Jordan Ghent

capital in forward? guys' what repurchases to Capital the any what going to kind preference of for kind program and have of appetite you I buyback just is. wanted your build your ask just place. is And about continues share and

James Mabry

Jordan, this is Jim.

did -- and noted, as just repurchase we So program the program. Board you renewed our the expired has

think activity that in was constant build, topic know, that cap on and But we're table. that's say that there's opportunities like feels potential would conversation. that, of As take very flexibility I other our I in it is could not in QX. least company. that at that you about think off think share are we we'll it repurchases always no the It's with use. leaning our for lot something there it possible a we present in and coming that industry, And quarters ratios we how the regards the We'll more say that And do direction. to you have some capital, expectation might the utilize that this gives generally opportunities, as us would going

we that, growing gives like something so near that capital that that the flexibility in term because maintaining is And and us. like the we

Jordan Ghent

Perfect. of And just a that. maybe then to follow-up kind

organic do growth and use weigh You opportunities. capital M&A? said between other you How

James Mabry

company it growth, organic quarters. last done we really in pretty had growth base, was And preferred. largely few the numbers good what across was with line years. this grown as we've think growth, that's over few we think very we've and all in target certainly And last you as diverse the much so saw in quarter, it and really the about the is I how

open year believe past, preference remain industry, has months the that the on those. to at in opportunities. XX as open M&A So in done and some we you that's we're banking smaller of the the could And over think like But or more priority. so said the Mitch right for the made shareholders. growing that to or course, be as the our ahead a looking And could so. we've And see acquisitions we we terms last that growth, nonbank And external that's -- forward we in feel look that there's that likelihood attractive depository growth.

Operator

This concludes question-and-answer session.

turn Waycaster to like I'd over the Mitch for back to closing conference Now remarks.

Mitchell Waycaster

the thank Sarah In our Well, closing, thank her of on best Davis Renasant Conference in for XX. to We Nick, upcoming the you ] XX [ November today. team retirement. each next the Sandler in Piper you, and joining wishes Pope and plan for very call participate

Operator

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

You disconnect. now may

Renasant (RNST) 25 Oct 232023 Q3 Earnings call transcript