RNST - Earnings call transcript Q2 2024

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Operator

Good morning, and welcome to the Renasant Corporation 2024 Second Quarter Earnings Conference Call and Webcast. [Operator Instructions] Please note, this event is being recorded.

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

Kelly Hutcheson

Good morning, and thank you for joining us for Renasant Corporation's 2024 Quarterly Webcast and Conference Call.

today of call team. executive this in are Renasant's members management Participating

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

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

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

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

Mitchell Waycaster

remains strong, in growth Results the increase progress. by for balance quarter led Kelly. you, sheet traditional solid Thank funded deposits showed in loans. an that The

remain our Asset quality historically culture at continue high strong and credit levels. reserves reflect to metrics credit

Renasant stabilization. valued the After work has on ongoing announced control the Insurance. the of for part company long of Renasant we quarter, a a time. Insurance statement margin and been sale income reflects The expense

The results. shareholders, forward we While we colleagues third forward. quarter sale reflected our going maintaining this relationship with move felt attractive to our impact will look be financial of in a conditions made for an the former market

the over turn call now to I will Kevin.

Kevin Chapman

Thank Mitch. you,

in quarter, our $X.XX quarter sold for first we servicing of portion on the of and extinguishment a were our million $X.X million, asset share. results, second mortgage at debt. earnings a $XX.X gain we the $XX,XXX rights or gain a our Looking Recall per diluted recognized of

our in the second items, per a $X.XX earnings linked-quarter these on Excluding increased share quarter basis.

us increased Deposits yields million retail with $X in which points XX loan drove from basis during quarter continue $XXX Loan just deposits. million noninterest-bearing an increased retail income afforded well. million perform the quarter-over-quarter, interest deposits solid to Traditional of to opportunity in million first first to Included when mature. quarter. which $XXX second was loan in the growth increase coupled allow over broker deposit in quarter, the deposits growth the from the $XX growth in

job done tremendous Our Pricing executing deposits is increase, team banking, this relationship goal built with with expense business remains model funding has hard our of basis the the 'XX. for and throughout a deposit a quarter continued to rewarded the And work interest with deposit our as of during linked increase especially has cost noninterest on although quarter. deposit loan for increased growth. managing slowed footprint. deposit competitive growth pace on strategy continued The basis our increasing first in in since quarter the XX quarter QX total income was base of time a this points on core second

basis noninterest $XXX,XXX income Income excluding the aforementioned in of the increased on driven Reported to sale interest on a income million, volume quarter. of points. our MSR mortgage an Adjusted the debt by gain declined some the the of decline assets basis and increase linked-quarter gain by $X.X was first in first division, a offset million quarter-over-quarter. degree in X of $X.X first quarter, in increased gains on quarter lock noninterest the from rate from million excluding MSR extinguishment which the sale $XXX margin

tax quarter. for quarter approximately the offset savings expense in certain quarter. decreased expense division, assessment, were expense to from the After and first these totaling In noninterest higher charitable volumes million The made from related first million FDIC contributions $XXX,XXX qualifies the credits. noninterest in increase that of $X.X areas. we 'XX, expense $X also adjusting other organizations, in which items, by the in to of mortgage Reported resulted increased special somewhat first levels which of we $XXX,XXX recorded

I turn Jim. to now the will call over

James Mabry

Thank Kevin. you,

million. quarter Total core the walk us annual deck. allowed growth X.X%. I $XXX sources. through we rate quarter shift second grew growth in deposit growth, funding and to from $XXX Loan the another to strong continue earnings an of million away the We footings was from As quarter's of which . results, slides experienced will noncore reference represents

granular deposit you core company's on is steady As and see X position ratio can and X, and remains loan-to-deposit growth, deposit strong the Slides base with base the core diverse strong. our at remained XX%. liquidity The deposit and overall

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

points and recorded asset $X.X percentage loss of was the loans provision ACL of We declined to which million, a X.XX%. million. comprised a primarily were $X.X to X of credit single total as Turning Net basis quality. charge-offs credit a

X. metrics Page on quality are presented Asset

quarter-over-quarter assets monitoring declined in We up. while ticked vigilant loans criticized remain Our risk. credit nonperforming

Our losses mitigate in to strategy and quickly is resolution order early loss. potential to identify towards work

Slides and are profitability metrics on XX Our XX. presented

well. revenue on basis, increased other Excluding an net all onetime driving linked-quarter adjusted a metrics increase in items, $X.X pre-provision million profitability as

diligent purchase interest margin X.XX%, basis point Slide represents Core X interest quarter-over-quarter. was of with to increase drove accounting pricing quarter. from in net net accretion the deposit interest growth, loan first Turning increase and coupled net which interest an which and recoveries, margin income excludes the Adjusted XX. both

Kevin noninterest expense. the on focus on deposit in and sides our sheet. commented the We highlights base liability funding being balance diligent within both pricing to core and and continue growing on the asset of income

categories the we of quarter, these insurance to impact beginning While the will third the line. expect in the bottom don't material impact a agency sale

over will I Mitch. the to turn now call back

Mitchell Waycaster

first foundation through X form months upon. to Results the Thank you, good a build Jim.

We future the to enable in will believe and to ahead. markets relationships, scale shareholder and the are us Southeastern years in opportunities value share excited grow add market about

call now over the turn will I operator. the to

Operator

[Operator first Instructions] The Scouten question Stephen comes Sandler. Piper from with

Stephen Scouten

overall Insurance specific I'm potentially a nature maybe I what if new perspective, priorities any capital first, or guess maybe M&A? And of curious, incremental there's be capital growth, with from today, that's kind from sale. of kind whether your the might that of even organic capital plans things hires, the

James Mabry

Stephen, this is Jim.

not sale $XX couple A from want your before QX Insurance the in about points company. million elsewhere that it's So was I the But it in part I in a industry. gain would of yes, as -- the company. an what we're terms of going question. a the dollars, we've to say, book big of I of as of important not to seen make it's course, obviously about go to

will The negative impact half slightly, of second again, be sale the EPS of EPS. very year, very for slightly but the to negative that modestly

The be that that it see out is. other what you'll to elevated the will slightly QX rate tax in is historically thing from gain because of point I'd want

normal rate So versus, of XX%. say, XX% our something around

there. So not much slight but a difference you'll difference, see

those use -- our relates that think to gain, capital it the to priorities I the As same. of remain

to We to and know we when that M&A. take outs #X or the I'd route return. We near said, prioirty off retain well. that's And does, if good be that's organic this And don't would capital don't to a of -- that would lift that's #X. But to capital table, as you've participate priority to that's want if that but it the capital we don't use any going We that sell don't incremental envision like foremost, of whether organic envision say target growth, term. certainly or the like earnings or that growth. capitalize be priority and near going or #X. the buybacks. we'd term as First

Stephen Scouten

of kind look side seeing And on things do of of Very we cost going here. relative Okay. first just stability But do cuts obviously the helpful. if margin think on about exactly the still the of is stable, what quarter. based going can to don't Still, the the know like. thinking Fed maybe what the trends you NIM deposit and the is curve to you're then remain couple rate this kind get that especially from

James Mabry

we again, be terms Stephen. get we I don't -- don't QX. say, basis see guess negative, that's in impact impacting in -- I QX, get of maybe the and EPS, in but September, But balance a very modestly of the about year, assumed I we've mean sheet. sort how still of since if and we -- I that start managing environment, slightly let's think would cut the flat rate it point thinking I we're And it a XX

the would say for be, of that I is flat environment, the margin, the outlook terms again, a outlook in of for roughly the margin rate year. balance In flat would our our

Stephen Scouten

Okay. obviously is a Great. mean, strong. maybe just still your reserve ticked bit, for And up I little credit metrics strong me, remain lastly and but

there to relative -- but more maybe anything you when Is that CRE you? some concern? Or around basis that your focused spoke a was on South noted any team note think a you resi we maybe earlier I really exposure, concerned all internal that for just weren't anything there the anything on at there there exposure. Gulf of or guys little year, is resi gives this you is that about

David Meredith

concerns us is this our as an all That concern ahead NPAs those and whether just on and while move the of heightened you assets bank. best due quality not note this and for and was go our foreclosure start those working commercial it, this David. like loans Stephen, was to of of some But wasn't assets go just we but we've quality as those we have increase get was be and remedy the of In what the area residential we to a valuation It customers mix there it collateral ahead felt direct XXX% that result underlying way, the when like it anything or remains quarter. in saw for been see for with residential it as a ahead those change our in not assets changes that with a asset to in to those them just watching and go was try loans in sale on portfolio. customers move residential. out of asset out far are to a as large quarter, far to think of about would time

Operator

next with comes from question Raymond James. Michael The Rose

Michael Rose

pay can if contemplating of kind of you for an as it, normally update downs we move sorry also loan Mitch, the we particularly missed guys on if and just production start, would just here, down. I a move as in forward, standpoint as are pipeline? you come a don't growth but maybe we both do, decrease rates you And expect kind if what from

Mitchell Waycaster

comment to resilient Sure. markets I'll begin the reflect a experienced and and that vibrant quarter, with the growth the million quarter in continues go we're in, good production, pipeline in yield with We this which another million good growth, net did on payoffs. we operating quarter $XXX loans, pipeline, then X.X%. that to started XX-day maybe $XXX roughly

on growth commented and Jim deposits. both and the Kevin loans of Both

quarter. So while a roughly in as I of want million. sheet relative to The $XXX deposit sides quarter this as prior our had point I'm That million might well, good balance does $XXX out growth very there, the compare it was on with to production well. both we the to

So the it kind and prior quarter. modestly That in million saw of quarter, payoffs was the governor the in $XXX ends we net mentioned payoffs you net the up resulted bump up, the we've payoffs, this net. is $XXX million to past, see, that compared as said on $XXX many times that in did where million we

XX% XX% was and production. break that I'll payoffs. back pipeline, I there I $XXX Georgia markets this our going our in Florida, out Tennessee, that another the production forward, looking past to XX% to million reflected -- in line. contribute in XX% and of regions, you another of well. in in our in just say our Alabama, quarter, for and commercial wouldn't corporate timing Florida They're Panhandle; markets, our in continue of XX% all unusual down to mentioned Central our And business Mississippi ordinary business our anything just But lines

So geographically you business to the and how types. distributes the throughout can that. and touch loan lines just it I'll both on see

C&I and granularity really usually in area the quarter, we And And million business-type would This in in I Kevin rounded well think, take And and commercial commercial less $X.X if quarter. be and an this again, and at quarter, and to type speaks XX% mentioned. you it saw lines past then that in very do XX% that production commercial X type that credits additional your credits X small traditional corporate about the production, another $X.X million short above, XX% than Jim it to business estate. that then real duration XX% owner-occupied past assets. out was this

net -- reflected cylinders. I growth I evidence just seen in relative remain And produce And looking year, optimistic fund loan ability this and to is to going the So as and forward. prudently different of would hit our we would say, to ultimately, to consistently the growth. throughout about to continue many as in ability forward, your think, going we question, somewhere credit. relative continue type pricing to I so the been our mid-single-digit on we've underwriting past, to, to that, I produce And and guess continue

Michael Rose

thorough usual. some just stabilized. in push-pull was to very have the deposits some a players your kind good a outsized about know banks as of from you answer just that Can markets. see competition Maybe referenced it as several few of NIB there's follow-up, there. talk Mitch other I of

to a do when there. you think actually could begin in costs? we get then deposit And some to see Just wanted color peak

James Mabry

is this Jim. Michael,

you right at feel isn't remains is know It that back like irrational environment. way it it you don't times as felt of a or, but the competitive mean, going I So very the does was. quarters. a maybe it if I if as as competition the couple out, irrational word, will, fierce point

doesn't moderated the just pressures I And just to NIB, question, as this some. So speak at asking the just looking the still there. you this -- They've are be as were but a was might deposits whole. --

quarter the of cost X.XX%. Our in was deposits second

at it look a June, X.XX%. you point, data just If it's was

in the that's evidence increases of of I just costs further deposit So think that moderating. --

competitive internally, balance say NIBs. also will Mitch really I on assuming for that as we some see we're look know what managing we QX anticipate at we when bottoms the or board, don't I of stabilize some saw referenced. as that the environment We in I a is I run-off competitive such it's it the we're the sort budgeted whether NIBs, with that for encouraging prepared not of we pleased trends a couple But quarters but we're and there. same ago. seeing saw across but level guess, mean, it. don't of seeing mentally sheet we'll were know, And that pricing I deposits certainly that additional or we out,

Michael Rose

finally then helpful. maybe following me, M&A. on up Very question And just for on Stephen's

guys assets. in $XX.X billion about You are

Would are to kind would a now. describe in I larger? what size. you in something Would of favor potentially it in looking necessarily you in those the be know be footprint Just theory deal. not for look you market? do Would right expand

size maybe color medium of would sort an any can And with long you the Just asset think for? about M&A both looking to organic terms opportunistic in we you over that term. and of be provide what could

Mitchell Waycaster

I on discipline thing opportunities. certainly, We we around would question is answering the we're scale within and the certainly And evaluating would our building One relative operate that just focused that density Michael. markets on billion like and a above, that size, Sure, density opportunity I focused in. start I within as an would footprint. sweet scale and $X to see probably or say, say just something spot

say back or model be to just quarter Also, with coming markets focused being we're additions culture the begin banks risk talent And I believe balance a But organic nonbanks organic type actually mentioned opportunities. We as say that front, evaluate continue strong outs. partners, business we whether would new thought X certainly, Jim just we strategic with will opportunistic, we we to staying had think on relative opportunities. to lift talent, positioned growth and on do about appetite. earlier, always and as those talent that with and we well with sheet. began this I

team of take We capable have opportunities. of those advantage a all to

Operator

Catherine The Mealor comes next question from KBW. with

Catherine Mealor

follow-up had conversation. margin just I on the X

than seen. this more Your loan we've increased yields quarter

see that the loan have thoughts see Just to pace we should back of of you the wanted for on the of increases year? yield kind if half updated

James Mabry

I couple Jim. and the renewed the quarters. rates could new been It does is we've over pleased would yes, this with least term, of been getting Catherine, new in say, we've at like near really last the feel renewed plateau. the increases in and that

there. pressures some seeing definitely we're So

of renewed new as the in new year, renewed for And balance I so you and think I or about could think some deals. see the pressures

a take it further, Catherine. step And actually, I'll

make so we're what X were a again, but a And look our trend, month, for little there. make renewed doesn't quarter. new If off June pressures the you we -- from X a for month some it's at seeing bit trend, it necessarily but and doesn't saw

Catherine Mealor

of new of But of category some just still a loans lower -- you say have that's yield? mix incremental or same kind

James Mabry

I -- what It's not to mix. experiences we're overall. seeing it's due wouldn't that really just say or I -- don't

for growth it's pricing I of there's in just think a loan it feels up lot competition like showing pressures. and

Catherine Mealor

makes Okay. sense. That

Okay. for maybe of quarters. have the past on from on expenses, back of And outlook the your base? Any couple expense flat the X then year expenses half for the update your been

Kevin Chapman

it's Kevin. Catherine, Yes.

really lot a change of there. whole So not there's

adjust do think I we for insurance have out. to coming

that's rate of what run run So our that the about what what we're was you thinking, for bring that's modeling we're back that million. $X of off will QX, if half But it the year. of affect the and rate down out still, in back

at measures liabilities, the scale to drives assets on the to been revenue, to mindful that Continue expenses. the we And to the greater looking work profitability, to ways and that's continue balance and our accountability discussed focus. repricing, reduce more expenses, find reduce on them continue or more our margin as Jim of be It It will where our opportunity sheet. can of is also be focus. to whether in improve repricing

Operator

The comes Group. next with question from Hovde Dave Bishop

David Bishop

I question. $X that Jim expense want hear to just sale the quarter. up Catherine's Insurance I was from about make impact or million sure I that Kevin, correct? Did hear follow I the per

James Mabry

That's correct.

David Bishop

CRE, of then increase But you back in -- us some granularity of of the know any NPAs. And there you real in it. discussed with was that . the side. driving impact issues? on the of estate, segments and can give some segments terms was commercial that C&I the any of granularity sort terms sort credit it if of in Got maybe turning I what the

David Meredith

office Sure. This those seek valuation property to resolve philosophy it or relationship was those off housing both normal them whether go -- to with space of valuations foreclosure. had increase of is the an be just be particularly have felt really issues credits NPAs through a whether it X where larger senior market little the housing senior through CRE impacted, work a of and continue favorable ahead bit types, some not We better those were bit and and is And identified XX%, loans, note as One those wasn't nature. for be was assets classified X and the just it concerns. broadly, long space of it kind David. occupancy and It another office to of due we were retail, of our these to in see of on period we commercial-related on X were all the credits a as some necessarily on assets and a was was that we time, borrowers -- thought a little for of assets credits that assets it where they and we -- like we've sale are were was quarter-over-quarter. proactive asset a in those XX% assortment -- a

this problem when loan problem to I as did get be to on we we'd put go think, case, valuation able loans or potential as where it's the work and to the expedite seek ago you point think of a remedy We're we those went those Dave, loans long-term of ahead know, out and the to concerns. won't typically we a work possible. nonaccrual, while as ahead to there's that going quickly on and that. -- resolution identify like kind we we which some to we'll of In

Operator

comes Jordan question next Stephens. The from with Ghent

Jordan Ghent

question little lower? of track and the kind the on It for I kind wondering quarters just around that . continued just a you allowance. info you ticking been be It's down going? stabilizing or where of last like to had a going could looks guys it's quick see if kind to few of give

David Meredith

this Jordan, David. is

on required So on the we reserve are. us, point philosophy level model out. comes model about we've and not We what a with of it this way seasonal us based but changed and kind factors it's the told a years has worked. our we've based We seasonal number strong them where asset our on where reserve our We set model guide at held us steady model. feel few it's our the ago, we of let to

in by little So down, X largely had in need a number model reduced bit. that but little built driven bit, we reserve pay where QX to the the a

But senior housing bit, due housing to that especially portfolio down put space that loan dollar derisked new little the to asset. charge loan X a and that talked NPA, in senior we down. the amount about that So we reserve was the growth, X as had to we really but on in came part we for related

change some and all in of that factors think little a quarter-over-quarter. on particular type the to drive in And continue those we cause I reserve asset of for continue housing model. senior until all, to we a that derisk the will see reduction model That that we see But a required follow that bit some asset.

James Mabry

year. just I'm David a suggested question add to talked allowance of change, -- too, the David and and said, like, implicit Jordan, down in I your couple that. for during circumstances like And to sorry, what mean, that I slowly to of I quarters. I we've add always feels Conditions will would ultimately things the as dictate again, going balance could that, it feels will think -- mean, drift but it just

seen But circumstances and for reason. by I that, if down anticipate for it the conditions hold year-end are. very a of and remain will XXX-ish hadn't and gravitate they that where charge-offs think we sort we've a low, reason We built they towards range but the it built

Operator

The next question Partners. from with comes John Rodis FIG

John Rodis

Jim, a maybe just a portfolio. this It's should was quick again question XX% It that down securities assets. on bit going about we little the think forward? of quarter. How

James Mabry

think not think internally, got, or Yes, liquidity to I us. about sources a I we sort line, bright XX%. we external And think of but think level hard of around obviously, it's a line of of about available we've a plenty

generally we're that I comfortable below something drifting XX%. wouldn't it but it much below, at it's all, where see if So is

So now we year-end, manage our on but that that's we'll between watch of philosophy how and that securities sort position. of sort

Operator

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

Mitchell Waycaster

of each to call who joined you your interest Renasant. Thank morning's this and Drew. you, you in thank Well,

Operator

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

may You now disconnect.

Renasant (RNST) 24 Jul 242024 Q2 Earnings call transcript