RNST - Earnings call transcript Q4 2024

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Operator

Good morning, and welcome to the Renasant Corporation 2024 Fourth Quarter and Year-End Earnings Conference Call and webcast. [Operator Instructions] Please note that this event is being recorded.

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

Kelly Hutcheson

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

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

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

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

Mitchell Waycaster

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

in and generating on first We credit performance. merger first sheet anticipate steady of a half on balance with and XXXX. for for merger Renasant. the the end marked transformative a disciplined completing combination, diligently After July team sides the our a our the successful of working a announcing necessary maintained on loan still quarter year successful planning pricing in the fourth both results focus The to growth,

I will Kevin. now call over to turn the

Kevin Chapman

you, of continued successful successful XXXX Mitch's To financial in positioned diligently was and and Renasant This merger one as growth Mitch. and a transformation team prepare XXXX our First. beyond. echo for with worked a has Thank work for and improve Renasant comments, success our performance year for to

will attention our quarter I financial fourth now our turn to results.

were of growth earnings $X.X linked-quarter Net of million per or $XX.X income basis, $XXX.X deposits. driven million basis. was to of Our a million, linked-quarter decrease on million This $X.XX a interest $XXX cost a significant increase solid bolstered diluted our loan increase on by was an share. by

have million. On the side strong sheet, the growth, increased of balance in we liability by which deposits, $XXX deposit continued especially to interest-bearing see

happened increased Total a did $XXX We a decreased as growth deposit $XX by by increase costs deposits year-end. hold deposits even which This deposits. reduction X deposit broker total during of basis any our basis XX not to points includes compared during million QX. million, broker QX point

Noninterest $XX.X third income the million quarter. decreased for

sale agency. a included our gain onetime $XX.X quarter of the third from million The insurance of pretax

and $X.X mortgage million decline gain the due to aforementioned revenue. adjusted in quarter-over-quarter of declines the the income decreased Excluding agency, the on mortgage primarily insurance volume sale seasonal noninterest in corresponding

merger fourth Noninterest driven $X.X $X expenses $XXX.X decrease, largely a for and expense by decrease quarter-over-quarter quarter, QX. million million million was a from in the conversion

of million merger expense representing $X.X basis. for on the was $XXX.X Excluding conversion linked-quarter expenses, and increase a quarter, million noninterest an

as as to to a on we the expenses strong continue manage to integrate quarter management execute Overall, year. work to diligently we will we our our growth. continue efficiently pricing, this deposit expense and We first had continued work

Jim. to now turn will I over the call

James Mabry

Kevin. Thank you,

by remaining $XXX.X the results, off things, to, deposits. part I of in our due our partially million, assets to our loan cash slides other deployed in reference As as $XXX.X we earnings offset liquidity will paying Total from strong million we large million brokered growth of decrease walk deck. grew among a which quarter's through was the $XX.X

On continue experienced the strong shift liability side, noncore we to to allowed another sources. funding from away which quarter deposit of growth, us

all required showed well minimums of the capital agency. X, the regulatory QX be ratios sale quarter. are in ratios the in meaningfully our These declines the The Slide capital capitalized. with Referencing on excess considered gain raise increased and in fourth insurance to ratio of moderate

were quality. $X.X as Turning percentage loans loss X provision decreased the of ACL Net million. on a recorded credit to a million of points to We asset total loans $X.X X.XX%. and basis quarter-over-quarter charge-offs

presented are metrics on X. quality Page Asset

decreased decreasing by assets basis nonperforming total loans points. X to of of Our basis X.XX% points criticized as with nonperforming percentage assets a points criticized a percent loans decreasing as basis XX XX for the to total quarter loans and assets total and

Our proactively work identify to strategy and early loans in is towards resolution to underperforming loss. mitigate quickly order

X.XX% net points margin, which and basis XX X.XX%. XX. yields deposits basis decreased Adjusted to accounting of Slide to interest to XX by and Adjusted interest for X.XX%, to basis quarter. the the X Turning cost points excludes points recoveries, decreased increased total loan purchase accretion

within income Kevin the expense. highlights commented and noninterest on

we encouraged the are to in it saw us momentum We on build by and believe positions XXXX. the in quarter that expense trends

related to we have with first. combination conversion reminder, a in considerable As the merger will expenses and the 'XX

back over the will call to now Mitch. I turn

Mitchell Waycaster

you, Thank Jim.

will coming and merger the application a The our bank First top-performing company's teams together once proceeding for form of the regional forward prospects to strengthen profile We look the earnings We Southeast. are in completed, upcoming Renasant. and balance about year. to meaningfully excited is this sheet

I will over to the now call for turn operator the questions.

Operator

James. Joe will Yanchunis today question from first your And Raymond with Instructions] [Operator come

Joseph Yanchunis

your So compression. of outlook, the modest some in for ahead which reported called NIM prior XQ came

rate current for trends NIM? we backdrop, should about near-term the the how given think So

James Mabry

This is Jim.

You're right.

modest behaved compression the -- we pricing couple in on funding just our our was base, I And say for than One, deposits guidance some say things. of Our would margin. better a anticipated. let's the

anticipated and that those costs we for than bright a spot So we was than real more there We higher came had a down expected. us. beta

down, yields but So -- and pretty well. in came held loan certainly

would its bit. little even say -- for for margin. outlook 'XX, And to to outlook flip cuts in as X modest now opposed is a we I going our we're the head our with the modest that some is compression, sort of So expansion on

Joseph Yanchunis

I loan appreciate pretty growth helpful. here. shifting then was over And That kind of to that.

notably So quarter. in quarter? answer, yields were stronger in just loan kind back the in near loan it And your follow growth the new on term? in of given we was prior about what up origination the should to think general how And the then increase trends sentiment,

Mitchell Waycaster

Jim, about... do touch talk yields, I'll and you want to on

James Mabry

Sure, Joe.

the if it's and and quarter, And in helpful, the at above was new in X.XX% spot December X.XX%. new it little the you look about If renewed for about renewed X%, -- was was around quarter. a

Joseph Yanchunis

And Joe, is this Mitch.

ability maybe on with entered to pipeline. Jim both production, we're sides million. let's entered to quarter just balance of on with the on that back We sheet. to with the We quite QX the of start pipeline Going coming our production, both. reflected a million. with price pleased $XXX fourth But $XXX

X%, continue loan was in up the each That XQ, million. was XX-day to strong which a geography, it across net your growth That in from production, in million. see So pipeline reflected QX, over $XXX was $XXX each point, to $XXX million very a we little in yielded of business line.

$XXX to $XXX if I net. it's million, to the relation the this going kind that We In $XXX range. you -- always over to average million in that from quarter of the that kind did which the note, thing at decrease would on we've as see down the million, $XXX in million. look of be pointed year, governor payoffs to -- One about a

the before, So net. affect we've payoffs there were more in line. said variability But as does

just still net remained back they had strong some quarter, X.X% production. But growth. we payoffs were if would to as the even in going we prior had production, And had

looking if our markets, lines of regions, to continue a both the we look current to production that pipeline. way just So in at our future, our and business meaningful to contribute each

commercial lines. going and XX% Mississippi, business just production, of quarter in our in Alabama, corporate XX% back this And in another XX% Georgia from past markets, that in was Tennessee XX% XX% was to and Florida Florida Panhandle, Central another the about

say, that credits. look we many back to And to And hit us saw if that on cylinders this continue quarter it consumer, XX% the production. I saw markets. the in discussion, as roughly business but that our only across again loan really usually -- strong with HELOC, the this point XX% at in And for geographic distribution, we when that in the the we small granularity, we and $XXX types gets always sides the banking, you we X been would million, to take not family, which has and business to X

there. quarter of that a came commercial had good XX% we credit. Another C&I, from very

out equipment rounding factoring. Owner-occupied We was find C&I, continue was past came their group, banking this the the XX% you'd quarter. finance, the to corporate from that which real commercial good last book. estate, ABL, -- larger And build

So again, current continuing geographically in that's by of pipeline. reflected about type, the We're business those to perform optimistic well and in by line, QX. all

Operator

Sandler. from question with Scouten Piper next will Your today come Stephen

Stephen Scouten

the can, and expecting confidence first curious approval had that in line? to from around anything can I still merger the the any close about give I time process, updates around pending guess you of know, color any kind specific don't later half, give you've that if

Mitchell Waycaster

we -- this with to I teams we in the how the point on process in Sure. would the we July. first remarks back we We the that planning on and half back the those touch say as just and reflected throughout both application as integration and and well originally have we just timing progressing. as approval prepared and engaged I the are have diligently companies, I'll pleased go expand regulators continue relative all and are in conversion both that worked planned, to companies would completing the our announced, maybe merger anticipate been to Stephen, process. of there. time, Since responsive, of very year. announced fact the And things work completing

Stephen Scouten

then think bank that help lines. if or Got particular, things to maybe about get any easier I Appreciate your And additional don't make color getting that Do time for regulatory changes guys some specific outside M&A maybe you look around it. relief? life more, favorable we in you potential there. of regulators know, Renasant the potentially improvements might could regulatory

Kevin Chapman

it's Kevin. Stephen, Yes.

years going the there. arguably with to regulatory I next the lot to be a years paying impacts, X ultimately learned X there's So say, been be I business picks nominations, be some a bank is or environment -- think there model, lot ways. you last in look don't the bank environment and changes of to our different. attention in, appointees, in are their appears that lot our -- of How it a if to that the at But have a banks think a is size different going close we're

-- it the we're of lot will some of a net some But I coming, overall, again, good, negative. it as to the as be being to may proposed regulatory that of And the be positive the well changes industry may think be changes positive Renasant. expecting

And will could impact impact to it more too as I our business stay make tell model. evolve, with a and us. stay But we trying early and things to think we to how understand understand close so way just we're sure tuned that it specificity lot there overall, how

Stephen Scouten

and this a thought maybe it. back NIM see down destination this get with in Appreciate quarter. to where lot more lower we you lag the lack all think from cycle And potential Do think lower kind schedule that here? get I with last effect costs point which thought better you rate betas, we here a for actually you Jim, we've seen as that, to forward related changed Got through little largely perspective, then a And great. bit the you'd a a cuts? that industry-wide the might ahead deposits you said pull easing and is Kevin. just of of can we we that's know, deposit do quarter, going me. and Or of a be

James Mabry

direction. think optimistic. was there's -- time. I and it we'll of for are there But And want think almost But us in I look that a worked quarter. mean overly the guard at there would the see direction in to against I couple well I I -- being think over things there obviously, really plays just changed. I out the how change a

call mean of slope was And I advertising we yield -- it to I be the had say, I going when I nice get to a very course, And again, difficult do there. very there encouraging, to the plays see. out, certainly notably, were as I some but a I see in inverted just to thing trying QX margin, we'll -- mean, and but not curve our But that we're we I'm modestly to think I think predict sea a see that's change mean, would how hopeful task. and I our is it's outlook think -- would not in change.

Operator

question Your Jones with will today come next Will KBW. from

William Jones

expense wanted positive. to narrative with around I really this start very quarter. year The has expenses been this

I surprised for chunky do is quarter see is good look rate kind or of jump you here, quarter this of So off comp into more of core to happened Was hitting the maybe onetime-ish was kind a year. the jumping the a first nature expense low the up And fourth anything that in line a feel next this in as like run quarter? year? this just bit watermark especially when there operating we

Kevin Chapman

Kevin. Yes. Will, this is

were we did been somewhat a year X One little E and Those they bit the is year. I in persistent really have couple that were that's throughout yes, just to and large, Renasant. losses, quarter, fraud things think just have So don't specific expenses all been of and the in losses, they've elevated operational a Reg specific categories. on disputes.

range bit that It think was that's to the every in QX. has We abnormally million 'XX it in up the happen going But in to of an been to necessarily don't a million, think issue. was but industry in in $X.X compared QX. QX I quarter, up trend line compared 'XX. that's high $X

is salaries We're self-funded and The benefits health item, a and other it's life. plan. and in employee

life health $X for that. million expense unusually claims pay our history expenses, which large is we've incur just this we health it's year. Year-to-date, compared up. And And and means we QX. And to is an outlier so had as an there, up been accrued

So that in somewhat outliers that about those are we've improvements been rate. masking run kind talking expense of those the are the X

items, you If expenses, out year-to-date back expenses you look those include and merger our are X%. but about you up

volatility, kind X%. it's out smooth the quarterly you of if So up about

back If flat we're health life, accrued roughly you and out year-to-date.

relates And off it so taking not our to eye we expenses. as are ball the

that, increase some Although we we 'XX. to we've levels. a to 'XX, down out expenses run unusual historical XXXX, back as rate work out is think had that But into we look and items good those up X% pop X% in in we'll as look get into to

-- we're There's keep But back flat the X% to to X% But at volatility increase some in expenses hard will merit It we think our that it. as is into in kind couple or work to again, number less lower, of a come done in for the as QX we've QX. we end overall, last has and continue will increases days. the play have back of XXXX, guiding. on years. expenses that what of half again, we'll work look

William Jones

I really to year. appreciate Yes. base there. helpful a color. Kevin, don't that's the want done really I this on have response expense the you nice thoughtful And guys job underscore,

maybe, And one that all color. for So for helpful thank Jim, you you.

it's rate bit view? updated today? but scale on the where with volatility, of a I material any first Just the there know there rate in any with stand some any sliding of Is marks -- thoughts change your a

James Mabry

marks minimis I change probably mean would we you within they capital we it But point, range, to back. and net at look and out toggling and to has the your EPS, that's the the roughly well a say moved if been actually, impact at back definitely of say, to monthly. it's was look but announced the you the at and because to sort I negative, this earn from look forth to going I movements sort positive when have de some or been -- of -- the deal,

end end we'll regulatory day, one it the get at of But at does of impact sort clarity, these -- some meaningful They a when has the earn-back. of on offset course, we update But numbers. another. it have the the of day, not

math. So we'll the that's the merger keep you updated, I describe would but way

William Jones

Yes.

finally the for then, And also they of great. look just That's quarter you a growth. really if nice had maybe Okay. Mitch, first, you, at

to combined And the a kind the X so about about achievable for where you right carrying companies momentum is think Or the it growth combined? as you growth rate XXXX. an what level combined there way feels like into of X company? companies nice think Is for really earmark are the

Mitchell Waycaster

grow mentioned of our our And that, from just won't complement how if should you a think ways, that market it lot We that To better bases. bring the think everything the just ability to have your similar at customers. just you seeing when first. Renasant I put Maybe will we I but in to overlap culture believe some considering I models, together them look have customer company continue, each very go their you how market. can I ability to that to to stories things our combined earlier, organically. markets. really on one other, reason that of to see And we additive a it's of the business to in look as and have to go point, be reflecting those I we're thing in same no together at don't

say that So view think and it favorably, integration planning quite those hear in lot same I of and thing you would of described with from I think we're and and a conversion, we I be in line quite would that encouraged, naturally, team. conversations what also the the continue, earlier. would I

Operator

today come Matt question from Olney next will Your with Stephens.

Matt Olney

highlighted renewed new the loan and you earlier. think already yields I

fixed reprice quarters? over loans should of few of us this variable volume will that the we expect loans next that Just the remind year, rate that

James Mabry

rate reprices variable that within book of this a Variable that, billion. less. I of a percent vast or X.X% XX% And month $X is at is about is the rate of say that of that the of will rate change. XX-plus book about majority

will be real So variable that book. what is to part you interesting rate yields And sense give the as of of size to we that question. your actually, and I but of get it second remember will the the the impact can't -- repricing, see a then

Matt Olney

kind rate of repricing fixed of The that question dynamics as book, rate far as book. fixed similar

James Mabry

sorry. Yes,

it, we've loans of And So next of a that's I $XXX months. to closer X.X%. $XXX rate that's And mind, million it's that in months. we've also the reprice that bear yield over carrying got, million XX a at blended probably would will in within rate -- and securities the actually, call call say the about mid-Xs. reprice, XX then next that reprice probably million And got, of we've got fixed it, $XXX

Matt Olney

is the That also front, on And helpful. a classified higher see credit loans? I in in quarter. behind tick that, little the Okay. loans Any color we classified uptick think the did bit

David Meredith

this special those there went criticized were that was were the They David. were criticized within million were bucket. to classified. was about transitioning mention Matt, $XX -- loans It is OAM that reclassified -- of that that were loans --

but ongoing migrated substandard. already there where those management, just that loans down we portfolio had we in -- So stress were our highlighted there to were we normal on them,

anything bucket. criticized classified So materially not in that new

Matt Olney

on it how Was borrowers in up you incremental I imply, what of would on were in Or mean, we guess, those I there that. maybe maybe stress? following quarter. last there versus internally Just lag those I graded was terms back October? just discussed incremental a suggesting stress guess, to are compared there's

David Meredith

we former. to classified. we to a the at downgrading asset, performance when of watch. we look type special classification into a we'll -- getting extends properly at performance criticized would continue And performance. be look special more longer, a the without we'll to And if move as look at detail, mention mention asset, as from watch that negative It be would It a

view have of within little transitory little So but be special just that level it's upgradable. there stayed to portfolio, incremental bucket a may mention element the some in There's are deterioration probably that bit that where a they bit of that be may loans criticized longer. not a a in shorter-term loans there's stress,

it continues, to stress classification we'll as OEM to that in the stay As it need at does what's then substandard. proper or look move

Operator

David with from question next Group. Bishop will come Hovde today your And

David Bishop

the segments? I'm on perspective as economy change here, the curious for Sort are driving of a been growth. evolves forcing loan rate or any interest you with grow Matt's staying perspective, are that the last in appetite any segment credit. there's changes appetite credit Just curious and any certain to loan your or change if from question there in

David Meredith

not. David, say there's in short, I would

We of any at making or estate, segments be real continue our changes economy, markets impacts it point, We're the the on to commercial watch not as what of reasons, going for we're impacts, to C&I the all to cognizant going whether due be potential whatever. remain due to administrative to tariffs obviously, are to And change. it determine be. this

impact. say, elements our today, appetite consistent had we'll with pretty as But to X past at staying we've thoughts much on the look continue we're And of really But quarters. around as for, pretty markets we're most Southeast. of positive our fairly the the I'd in

to most continue of C&I. strong in our and see most marketplace CRE aspects We aspects in performance of

lending teams, So a And to risk outlook. we our positive a outlook asset positive most towards our have maintain classes. we guidance in

David Bishop

And the looks to into cash flows, it. back maybe It then little this Got side. quarter, or seasonality like leaned a bit sheet some more. you balance funding turning

resumption assuming? see bit Or into growth, quarter, first in you is of think there the a do merger? quarter you're loan Looking first the liquidity continuing of any at growth into the still here if lean loan the we little you

James Mabry

quarter. I deposit was good in we or a exceed growth think, growth. core loan this as what's quarter, growth -- liquidity. we X, say we've the of is Dave, mean I we what -- core And know, leaned it yet you I really struck have And still sort was this X deposit didn't me have into quarter would have -- where first interesting about -- we

I sub-X% deposit got which small wholesale down -- rate Loan because on not for it. borrowings very a no you on know, pay -- no Bank, got off roughly we're a X% we've going the were the to we're Home core think except And it's amount, as we Federal side.

we mean just say as look mean, really that to we really half, performed as expect -- us, I about continue. we engine. would I first at the good I this, QX for we our look and it's deposit to feel But well

And is of how quarter. one a the would the purchaser probably that a net in say I And or first of that we demand probably out we're so half. securities the we'll haven't first don't more. going in, side year be plays know, for see loan quarter, But that done I to

So and to side us the I think if tell movements those just have about sheet we've of flexibility give loan sort story balance the in growth great we things work the the from don't the deposit done the put on to the it that securities.

David Bishop

I the of appreciate deposit My staying sort Great. the color. on last question, side.

loan the maturities about talked repricing. You

terms Just the of if any update half the side fixed on year. maybe deposit in in the curious there's CD of repricing first

James Mabry

it, our getting side, if look be Xs. probably probably On got blended And we've rate low call that the is the and first that CDs roughly, $X we're billion to on you mature the call that -- X.XX% now, at in -- CD of half, X%. it's, those will pricing the it,

that give sense the you will So income impact of might that statement. how a

Operator

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

Mitchell Waycaster

you call and interest for thank We thank Renasant. to Well, today. each joining you, appreciate you of Nick, your the in

Operator

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

disconnect. now may You

Renasant (RNST) 29 Jan 252024 Q4 Earnings call transcript