Renasant Corporation (NASDAQ: RNST) (the “Company”) today announced earnings results for the first quarter of 2023.
(Dollars in thousands, except earnings per share) Three Months Ended
  Mar 31, 2023 Dec 31, 2022 Mar 31, 2022
Net income and earnings per share:      
Net income $46,078 $46,276 $33,547
Basic EPS   0.82   0.83   0.60
Diluted EPS   0.82   0.82   0.60
Adjusted diluted EPS (Non-GAAP)(1)   0.82   0.89   0.60

“We continue to focus on safety and soundness in our decision making and believe we are well positioned to service our customers and produce attractive results for our shareholders,” remarked C. Mitchell Waycaster, Renasant President and Chief Executive Officer. “The Company’s granular core funding and strong capital base remain foundations of our bank.”

Quarterly Highlights

Earnings

  • Net income for the first quarter of 2023 was $46.1 million with diluted EPS of $0.82
  • Net interest income (fully tax equivalent) for the first quarter of 2023 was $138.5 million, down $2.0 million on a linked quarter basis
  • For the first quarter of 2023, net interest margin was 3.66%, down 12 basis points on a linked quarter basis
  • Cost of total deposits was 99 basis points for the first quarter of 2023, up 47 basis points on a linked quarter basis
  • Notwithstanding the elimination of certain deposit service charges, noninterest income increased $3.9 million on a linked quarter basis primarily due to an increase in mortgage banking income. The Company’s wealth management and insurance lines of business produced steady results during the first quarter of 2023
  • The mortgage division generated $0.6 billion in interest rate lock volume during the first quarter of 2023, compared to $0.5 billion in the fourth quarter of 2022. Gain on sale margin was 1.15% for the first quarter of 2023, down 49 basis points on a linked quarter basis
  • Noninterest expense increased $6.1 million during the first quarter of 2023, primarily due to $2.7 million of expenses related to the operations of Republic Business Credit, acquired on December 30, 2022, lower deferred loan origination fees and a seasonal increase in both payroll taxes and the Company’s match of 401k contributions.

Balance Sheet

  • Loans increased $188.1 million on a linked quarter basis from December 31, 2022, which represents 6.6% annualized net loan growth
  • The securities portfolio decreased $49.8 million on a linked quarter basis, due to net cash outflows during the quarter of $70.5 million and a positive fair market value adjustment in our available-for-sale portfolio of $20.7 million
  • Deposits at March 31, 2023 increased $425.1 million on a linked quarter basis, driven by an increase in brokered deposits of $623.4 million. Brokered deposits were $856.5 million at March 31, 2023. Noninterest bearing deposits decreased $313.9 million on a linked quarter basis and represented 30.5% of total deposits at March 31, 2023

Capital and Liquidity

  • Book value per share and tangible book value per share (non-GAAP)(1) increased 2.2% and 4.5%, respectively, on a linked quarter basis
  • The Company has a $100 million stock repurchase program that is in effect through October 2023; there was no buyback activity during the first quarter of 2023

Credit Quality

  • The Company recorded a provision for credit losses on loans of $8.0 million and a recovery of credit losses on unfunded commitments (included in noninterest expense) of $1.5 million for the first quarter of 2023
  • The allowance for credit losses on loans to total loans was unchanged on a linked quarter basis at 1.66% at March 31, 2023 and December 31, 2022
  • The coverage ratio, or the allowance for credit losses on loans to nonperforming loans, was 259.39% at March 31, 2023, compared to 337.73% at December 31, 2022
  • Net loan charge-offs for the first quarter of 2023 were $4.7 million, or 0.16% of average loans on an annualized basis
  • Nonperforming loans to total loans increased to 0.64% at March 31, 2023 compared to 0.49% at December 31, 2022 and criticized loans (which include classified and special mention loans) to total loans decreased to 2.44% at March 31, 2023, compared to 2.47% at December 31, 2022

(1) This is a non-GAAP financial measure. A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.

Income Statement

(Dollars in thousands, except per share data) Three Months Ended
  Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
Interest income          
Loans held for investment $ 161,787 $ 145,360 $ 123,100 $ 106,409 $ 95,829
Loans held for sale   1,737   1,688   2,075   2,586   2,863
Securities   15,091   15,241   14,500   12,471   10,835
Other   5,430   2,777   3,458   1,954   664
Total interest income   184,045   165,066   143,133   123,420   110,191
Interest expense          
Deposits   32,866   17,312   7,241   5,018   5,637
Borrowings   15,404   9,918   5,574   4,887   4,925
Total interest expense   48,270   27,230   12,815   9,905   10,562
Net interest income   135,775   137,836   130,318   113,515   99,629
Provision for loan losses   7,960   10,488   9,800   2,000   1,500
Net interest income after provision for credit losses   127,815   127,348   120,518   111,515   98,129
Noninterest income   37,293   33,395   41,186   37,214   37,458
Noninterest expense   107,708   101,582   101,574   98,194   94,105
Income before income taxes   57,400   59,161   60,130   50,535   41,482
Income taxes   11,322   12,885   13,563   10,857   7,935
Net income $ 46,078 $ 46,276 $ 46,567 $ 39,678 $ 33,547
           
Adjusted net income (non-GAAP)(1) $ 46,078 $ 50,324 $ 44,233 $ 40,601 $ 33,728
Adjusted pre-provision net revenue (“PPNR”) (non-GAAP)(1) $ 63,860 $ 72,187 $ 66,970 $ 54,172 $ 42,664
           
Basic earnings per share $ 0.82 $ 0.83 $ 0.83 $ 0.71 $ 0.60
Diluted earnings per share   0.82   0.82   0.83   0.71   0.60
Adjusted diluted earnings per share (non-GAAP)(1)   0.82   0.89   0.79   0.72   0.60
Average basic shares outstanding   56,008,741   55,953,104   55,947,214   55,906,755   55,809,192
Average diluted shares outstanding   56,270,219   56,335,446   56,248,720   56,182,845   56,081,863
Cash dividends per common share $ 0.22 $ 0.22 $ 0.22 $ 0.22 $ 0.22

(1) This is a non-GAAP financial measure. A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.

Performance Ratios

  Three Months Ended
  Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
Return on average assets 1.09 % 1.11 % 1.11 % 0.96 % 0.81 %
Adjusted return on average assets (non-GAAP)(1) 1.09   1.20   1.05   0.98   0.82  
Return on average tangible assets (non-GAAP)(1) 1.19   1.20   1.20   1.04   0.89  
Adjusted return on average tangible assets (non-GAAP)(1) 1.19   1.30   1.14   1.07   0.90  
Return on average equity 8.55   8.58   8.50   7.31   6.05  
Adjusted return on average equity (non-GAAP)(1) 8.55   9.33   8.07   7.48   6.08  
Return on average tangible equity (non-GAAP)(1) 16.29   15.98   15.64   13.50   10.93  
Adjusted return on average tangible equity (non-GAAP)(1) 16.29   17.35   14.87   13.81   10.99  
Efficiency ratio (fully taxable equivalent) 61.26   58.39   58.50   64.37   67.78  
Adjusted efficiency ratio (non-GAAP)(1) 61.30   56.25   58.78   62.44   67.02  
Dividend payout ratio 26.83   26.51   26.51   30.99   36.67  

Capital and Balance Sheet Ratios

  As of
  Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
Shares outstanding   56,073,658     55,953,104     55,953,104     55,932,017     55,880,666  
Market value per share $ 30.58   $ 37.59   $ 31.28   $ 28.81   $ 33.45  
Book value per share   39.01     38.18     37.39     37.85     38.25  
Tangible book value per share (non-GAAP)(1)   20.92     20.02     20.12     20.55     20.91  
Shareholders’ equity to assets   12.52 %   12.57 %   12.70 %   12.74 %   12.68 %
Tangible common equity ratio (non-GAAP)(1)   7.13     7.01     7.26     7.34     7.35  
Leverage ratio   9.18     9.36     9.39     9.16     9.00  
Common equity tier 1 capital ratio   10.19     10.21     10.64     10.74     10.78  
Tier 1 risk-based capital ratio   10.98     11.01     11.47     11.60     11.67  
Total risk-based capital ratio   14.68     14.63     15.15     15.34     15.51  

(1) This is a non-GAAP financial measure. A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.

Noninterest Income and Noninterest Expense

(Dollars in thousands) Three Months Ended
  Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
Noninterest income          
Service charges on deposit accounts $ 9,120 $ 10,445   $ 10,216 $ 9,734   $ 9,562  
Fees and commissions   4,676   4,470     4,148   4,668     3,982  
Insurance commissions   2,446   2,501     3,108   2,591     2,554  
Wealth management revenue   5,140   5,237     5,467   5,711     5,924  
Mortgage banking income   8,517   5,170     12,675   8,316     9,633  
BOLI income   3,003   2,487     2,296   2,331     2,153  
Other   4,391   3,085     3,276   3,863     3,650  
Total noninterest income $ 37,293 $ 33,395   $ 41,186 $ 37,214   $ 37,458  
Noninterest expense          
Salaries and employee benefits $ 69,832 $ 67,372   $ 66,463 $ 65,580   $ 62,239  
Data processing   3,633   3,521     3,526   3,590     4,263  
Net occupancy and equipment   11,405   11,122     11,266   11,155     11,276  
Other real estate owned   30   (59 )   34   (187 )   (241 )
Professional fees   3,467   2,856     3,087   2,778     3,151  
Advertising and public relations   4,686   3,631     3,229   3,406     4,059  
Intangible amortization   1,426   1,195     1,251   1,310     1,366  
Communications   1,980   2,028     1,999   1,904     2,027  
Merger and conversion related expenses     1,100           687  
Restructuring charges (benefit)           1,187     (455 )
Other   11,249   8,816     10,719   7,471     5,733  
Total noninterest expense $ 107,708 $ 101,582   $ 101,574 $ 98,194   $ 94,105  

Mortgage Banking Income

(Dollars in thousands) Three Months Ended
  Mar 31, 2023   Dec 31, 2022     Sep 30, 2022   Jun 30, 2022     Mar 31, 2022  
Gain on sales of loans, net $ 4,770 $ 1,003   $ 5,263 $ 3,490   $ 6,047  
Fees, net   1,806   1,849     2,405   3,064     3,053  
Mortgage servicing income (loss), net   1,941   2,318     5,007   1,762     533  
Total mortgage banking income $ 8,517 $ 5,170   $ 12,675 $ 8,316   $ 9,633  

Balance Sheet

(Dollars in thousands) As of
  Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
Assets          
Cash and cash equivalents $ 847,697   $ 575,992   $ 479,500   $ 1,010,468   $ 1,607,493  
Securities held to maturity, at amortized cost   1,300,240     1,324,040     1,353,502     488,851     487,194  
Securities available for sale, at fair value   1,507,907     1,533,942     1,569,242     2,528,253     2,405,316  
Loans held for sale, at fair value   159,318     110,105     144,642     196,598     280,464  
Loans held for investment   11,766,425     11,578,304     11,105,004     10,603,744     10,313,459  
Allowance for credit losses on loans   (195,292 )   (192,090 )   (174,356 )   (166,131 )   (166,468 )
Loans, net   11,571,133     11,386,214     10,930,648     10,437,613     10,146,991  
Premises and equipment, net   287,006     283,595     284,062     284,035     285,344  
Other real estate owned   4,818     1,763     2,412     2,807     2,062  
Goodwill and other intangibles   1,014,415     1,015,884     966,461     967,713     969,022  
Bank-owned life insurance   375,572     373,808     371,650     371,298     369,344  
Mortgage servicing rights   85,039     84,448     81,980     94,743     91,730  
Other assets   320,938     298,385     287,000     235,722     218,797  
Total assets $ 17,474,083   $ 16,988,176   $ 16,471,099   $ 16,618,101   $ 16,863,757  
           
Liabilities and Shareholders’ Equity          
Liabilities          
Deposits:          
Noninterest-bearing $ 4,244,877   $ 4,558,756   $ 4,827,220   $ 4,741,397   $ 4,706,256  
Interest-bearing   9,667,142     8,928,210     8,604,904     9,022,532     9,284,641  
Total deposits   13,912,019     13,486,966     13,432,124     13,763,929     13,990,897  
Short-term borrowings   732,057     712,232     312,818     112,642     111,279  
Long-term debt   431,111     428,133     426,821     431,553     435,416  
Other liabilities   211,596     224,829     207,055     193,100     188,523  
Total liabilities   15,286,783     14,852,160     14,378,818     14,501,224     14,726,115  
           
Shareholders’ equity:          
Preferred stock                    
Common stock   296,483     296,483     296,483     296,483     296,483  
Treasury stock   (107,559 )   (111,577 )   (111,577 )   (112,295 )   (114,050 )
Additional paid-in capital   1,299,458     1,302,422     1,299,476     1,298,207     1,297,088  
Retained earnings   891,242     857,725     823,951     789,880     762,690  
Accumulated other comprehensive loss   (192,324 )   (209,037 )   (216,052 )   (155,398 )   (104,569 )
Total shareholders’ equity   2,187,300     2,136,016     2,092,281     2,116,877     2,137,642  
Total liabilities and shareholders’ equity $ 17,474,083   $ 16,988,176   $ 16,471,099   $ 16,618,101   $ 16,863,757  

Net Interest Income and Net Interest Margin

(Dollars in thousands) Three Months Ended
  March 31, 2023 December 31, 2022 March 31, 2022
  AverageBalance InterestIncome/Expense Yield/Rate AverageBalance InterestIncome/Expense Yield/Rate AverageBalance InterestIncome/Expense Yield/Rate
Interest-earning assets:                  
Loans held for investment $ 11,688,534 $ 163,970 5.68 % $ 11,282,422 $ 147,519 5.19 % $ 10,108,511 $ 97,001 3.88 %
Loans held for sale   103,410   1,737 6.72 %   117,082   1,688 5.77 %   330,442   2,863 3.48 %
Taxable securities   2,588,148   13,054 2.02 %   2,657,248   13,174 1.98 %   2,499,822   8,782 1.41 %
Tax-exempt securities(1)   443,996   2,608 2.35 %   447,287   2,637 2.36 %   438,380   2,635 2.40 %
Total securities   3,032,144   15,662 2.07 %   3,104,535   15,811 2.04 %   2,938,202   11,417 1.55 %
Interest-bearing balances with banks   464,229   5,430 4.74 %   269,975   2,777 4.08 %   1,463,991   664 0.18 %
Total interest-earning assets   15,288,317   186,799 4.94 %   14,774,014   167,795 4.51 %   14,841,146   111,945 3.05 %
Cash and due from banks   197,782       201,369       206,224    
Intangible assets   1,011,557       967,005       965,430    
Other assets   660,242       635,452       684,464    
Total assets $ 17,157,898     $ 16,577,840     $ 16,697,264    
Interest-bearing liabilities:                  
Interest-bearing demand(2) $ 6,066,770 $ 20,298 1.36 % $ 6,018,679 $ 12,534 0.83 % $ 6,636,392 $ 3,647 0.22 %
Savings deposits   1,052,802   826 0.32 %   1,093,997   582 0.21 %   1,097,560   139 0.05 %
Brokered deposits   395,942   4,318 4.42 %   93,764   1,047 4.43 %     %
Time deposits   1,564,658   7,424 1.92 %   1,324,042   3,149 0.94 %   1,374,722   1,851 0.55 %
Total interest-bearing deposits   9,080,172   32,866 1.47 %   8,530,482   17,312 0.81 %   9,108,674   5,637 0.25 %
Borrowed funds   1,281,552   15,404 4.86 %   893,705   9,918 4.42 %   485,777   4,925 4.08 %
Total interest-bearing liabilities   10,361,724   48,270 1.89 %   9,424,187   27,230 1.15 %   9,594,451   10,562 0.44 %
Noninterest-bearing deposits   4,386,998       4,805,014       4,651,793    
Other liabilities   222,382       209,544       201,353    
Shareholders’ equity   2,186,794       2,139,095       2,249,667    
Total liabilities and shareholders’ equity $ 17,157,898     $ 16,577,840     $ 16,697,264    
Net interest income/ net interest margin   $ 138,529 3.66 %   $ 140,565 3.78 %   $ 101,383 2.76 %
Cost of funding     1.33 %     0.76 %     0.30 %
Cost of total deposits     0.99 %     0.52 %     0.17 %

(1) U.S. Government and some U.S. Government Agency securities are tax-exempt in the states in which the Company operates.(2) Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.

Supplemental Margin Information

(Dollars in thousands) Three Months Ended
  Mar 31, 2023 Dec 31, 2022 Mar 31, 2022
Earning asset mix:      
Loans held for investment   76.45 %   76.36 %   68.11 %
Loans held for sale   0.68     0.79     2.23  
Securities   19.83     21.01     19.80  
Interest-bearing balances with banks   3.04     1.84     9.86  
Total   100.00 %   100.00 %   100.00 %
       
Funding sources mix:      
Noninterest-bearing demand   29.74 %   33.77 %   32.65 %
Interest-bearing demand   41.13     42.30     46.59  
Savings   7.14     7.69     7.70  
Brokered deposits   2.68     0.66      
Time deposits   10.61     9.31     9.65  
Borrowed funds   8.70     6.27     3.41  
Total   100.00 %   100.00 %   100.00 %
       
Net interest income collected on problem loans $ 392   $ 161   $ 434  
Total accretion on purchased loans   670     625     1,235  
Total impact on net interest income $ 1,062   $ 786   $ 1,669  
Impact on net interest margin   0.03 %   0.02 %   0.04 %
Impact on loan yield   0.04 %   0.03 %   0.06 %

Loan Portfolio

(Dollars in thousands) As of
  Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
Loan Portfolio:                              
Commercial, financial, agricultural $ 1,740,778   $ 1,673,883   $ 1,513,091   $ 1,497,272   $ 1,445,607  
Lease financing   121,146     115,013     103,357     101,350     89,842  
Real estate - construction   1,424,352     1,330,337     1,215,056     1,126,363     1,222,052  
Real estate - 1-4 family mortgages   3,278,980     3,216,263     3,127,889     3,030,083     2,840,979  
Real estate - commercial mortgages   5,085,813     5,118,063     5,016,665     4,717,513     4,577,864  
Installment loans to individuals   115,356     124,745     128,946     131,163     137,115  
Total loans $ 11,766,425   $ 11,578,304   $ 11,105,004   $ 10,603,744   $ 10,313,459  

Credit Quality and Allowance for Credit Losses on Loans

(Dollars in thousands) As of
  Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
Nonperforming Assets:          
Nonaccruing loans $ 56,626   $ 56,545   $ 54,278   $ 43,897   $ 51,995  
Loans 90 days or more past due   18,664     331     1,587     617     247  
Total nonperforming loans   75,290     56,876     55,865     44,514     52,242  
Other real estate owned   4,818     1,763     2,412     2,807     2,062  
Total nonperforming assets $ 80,108   $ 58,639   $ 58,277   $ 47,321   $ 54,304  
           
Criticized Loans          
Classified loans $ 222,701   $ 200,249   $ 193,844   $ 185,267   $ 178,015  
Special Mention loans   64,832     86,172     69,883     87,476     76,949  
Criticized loans(1) $ 287,533   $ 286,421   $ 263,727   $ 272,743   $ 254,964  
           
Allowance for credit losses on loans $ 195,292   $ 192,090   $ 174,356   $ 166,131   $ 166,468  
Net loan charge-offs $ 4,732   $ 2,566   $ 1,575   $ 2,337   $ 851  
Annualized net loan charge-offs / average loans   0.16 %   0.09 %   0.06 %   0.09 %   0.03 %
Nonperforming loans / total loans   0.64     0.49     0.50     0.42     0.51  
Nonperforming assets / total assets   0.46     0.35     0.35     0.28     0.32  
Allowance for credit losses on loans / total loans   1.66     1.66     1.57     1.57     1.61  
Allowance for credit losses on loans / nonperforming loans   259.39     337.73     312.10     373.21     318.65  
Criticized loans / total loans   2.44     2.47     2.37     2.57     2.47  

(1) Criticized loans include loans in risk rating classifications of classified and special mention.

CONFERENCE CALL INFORMATION:A live audio webcast of a conference call with analysts will be available beginning at 10:00 AM Eastern Time (9:00 AM Central Time) on Wednesday, April 26, 2023.

The webcast is accessible through Renasant’s investor relations website at www.renasant.com or https://event.choruscall.com/mediaframe/webcast.html?webcastid=lXO7IuJ3. To access the conference via telephone, dial 1-877-513-1143 in the United States and request the Renasant Corporation 2023 First Quarter Earnings Webcast and Conference Call. International participants should dial 1-412-902-4145 to access the conference call.

The webcast will be archived on www.renasant.com after the call and will remain accessible for one year. A replay can be accessed via telephone by dialing 1-877-344-7529 in the United States and entering conference number 6764445 or by dialing 1-412-317-0088 internationally and entering the same conference number. Telephone replay access is available until May 10, 2023.

ABOUT RENASANT CORPORATION:

Renasant Corporation is the parent of Renasant Bank, a 119-year-old financial services institution. Renasant has assets of approximately $17.5 billion and operates 196 banking, lending, mortgage, wealth management and insurance offices throughout the Southeast as well as offering factoring and asset-based lending on a nationwide basis.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:

This press release may contain, or incorporate by reference, statements about Renasant Corporation that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “projects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “focus,” “possible,” “may increase,” “may fluctuate,” “will likely result,” and similar expressions, or future or conditional verbs such as “will,” “should,” “would” and “could,” are generally forward-looking in nature and not historical facts. Forward-looking statements include information about the Company’s future financial performance, business strategy, projected plans and objectives and are based on the current beliefs and expectations of management. The Company’s management believes these forward-looking statements are reasonable, but they are all inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements, and such differences may be material. Prospective investors are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties and, accordingly, investors should not place undue reliance on these forward-looking statements, which speak only as of the date they are made.

Important factors currently known to management that could cause our actual results to differ materially from those in forward-looking statements include the following: (i) the Company’s ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses, grow the acquired operations and realize the cost savings expected from an acquisition to the extent and in the timeframe anticipated by management; (ii) the effect of economic conditions and interest rates on a national, regional or international basis; (iii) timing and success of the implementation of changes in operations to achieve enhanced earnings or effect cost savings; (iv) competitive pressures in the consumer finance, commercial finance, insurance, financial services, asset management, retail banking, factoring and mortgage lending and auto lending industries; (v) the financial resources of, and products available from, competitors; (vi) changes in laws and regulations as well as changes in accounting standards; (vii) changes in policy by regulatory agencies; (viii) changes in the securities and foreign exchange markets; (ix) the Company’s potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth; (x) changes in the quality or composition of the Company’s loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers or issuers of investment securities, or the impact of interest rates on the value of our investment securities portfolio; (xi) an insufficient allowance for credit losses as a result of inaccurate assumptions; (xii) changes in the sources and costs of the capital we use to make loans and otherwise fund our operations, due to deposit outflows, changes in the mix of deposits and the cost and availability of borrowings; (xiii) general economic, market or business conditions, including the impact of inflation; (xiv) changes in demand for loan products and financial services; (xv) concentration of credit exposure; (xvi) changes or the lack of changes in interest rates, yield curves and interest rate spread relationships; (xvii) increased cybersecurity risk, including potential network breaches, business disruptions or financial losses; (xviii) civil unrest, natural disasters, epidemics (including the re-emergence of the COVID-19 pandemic) and other catastrophic events in the Company’s geographic area; (xix) the impact, extent and timing of technological changes; and (xx) other circumstances, many of which are beyond management’s control.

Management believes that the assumptions underlying the Company’s forward-looking statements are reasonable, but any of the assumptions could prove to be inaccurate. Investors are urged to carefully consider the risks described in the Company’s filings with the Securities and Exchange Commission (the “SEC”) from time to time, including its most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are available at www.renasant.com and the SEC’s website at www.sec.gov.

The Company undertakes no obligation, and specifically disclaims any obligation, to update or revise forward-looking statements, whether as a result of new information or to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by federal securities laws.

NON-GAAP FINANCIAL MEASURES:

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), this press release and the presentation slides furnished to the SEC on the same Form 8-K as this release contain non-GAAP financial measures, including, without limitation, (i) core loan yield, (ii) core net interest income and margin, (iii) adjusted pre-provision net revenue, (iv) adjusted net income, (v) adjusted diluted earnings per share, (vi) tangible book value per share, (vii) the tangible common equity ratio, (viii) certain performance ratios (namely, the ratio of adjusted pre-provision net revenue to average assets, the adjusted return on average assets and on average equity, and the return on average tangible assets and on average tangible common equity (including on an as-adjusted basis)), and (ix) the adjusted efficiency ratio.

These non-GAAP financial measures adjust GAAP financial measures to exclude intangible assets and/or certain charges (such as, among others, merger and conversion expenses, gain on sale of MSR and restructuring charges with respect to which the Company is unable to accurately predict when these charges will be incurred or, when incurred, the amount thereof). Management uses these non-GAAP financial measures when evaluating capital utilization and adequacy. In addition, the Company believes that these non-GAAP financial measures facilitate the making of period-to-period comparisons and are meaningful indicators of its operating performance, particularly because these measures are widely used by industry analysts for companies with merger and acquisition activities. Also, because intangible assets such as goodwill and the core deposit intangible and charges such as restructuring charges can vary extensively from company to company and, as to intangible assets, are excluded from the calculation of a financial institution’s regulatory capital, the Company believes that the presentation of this non-GAAP financial information allows readers to more easily compare the Company’s results to information provided in other regulatory reports and the results of other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables below under the caption “Non-GAAP Reconciliations”.

None of the non-GAAP financial information that the Company has included in this release or the accompanying presentation slides are intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Investors should note that, because there are no standardized definitions for the calculations as well as the results, the Company’s calculations may not be comparable to similarly titled measures presented by other companies. Also, there may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

Non-GAAP Reconciliations

(Dollars in thousands, except per share data) Three Months Ended
  Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
Adjusted Pre-Provision Net Revenue (“PPNR”)      
Net income (GAAP) $ 46,078   $ 46,276   $ 46,567   $ 39,678   $ 33,547  
Income taxes   11,322     12,885     13,563     10,857     7,935  
Provision for credit losses (including unfunded commitments)   6,460     10,671     9,800     2,450     950  
Pre-provision net revenue (non-GAAP) $ 63,860   $ 69,832   $ 69,930   $ 52,985   $ 42,432  
Merger and conversion expense       1,100             687  
Gain on sale of MSR           (2,960 )        
Restructuring charges (benefit)               1,187     (455 )
Voluntary reimbursement of certain re-presentment NSF fees       1,255              
Adjusted pre-provision net revenue (non-GAAP) $ 63,860   $ 72,187   $ 66,970   $ 54,172   $ 42,664  
           
Adjusted Net Income and Adjusted Tangible Net Income      
Net income (GAAP) $ 46,078   $ 46,276   $ 46,567   $ 39,678   $ 33,547  
Amortization of intangibles   1,426     1,195     1,251     1,310     1,366  
Tax effect of adjustments noted above(2)   (299 )   (260 )   (265 )   (291 )   (303 )
Tangible net income (non-GAAP) $ 47,205   $ 47,211   $ 47,553   $ 40,697   $ 34,610  
           
Net income (GAAP) $ 46,078   $ 46,276   $ 46,567   $ 39,678   $ 33,547  
Merger and conversion expense       1,100             687  
Gain on sale of MSR           (2,960 )        
Restructuring charges (benefit)               1,187     (455 )
Initial provision for acquisitions       2,820              
Voluntary reimbursement of certain re-presentment NSF fees       1,255              
Tax effect of adjustments noted above(2)       (1,127 )   626     (264 )   (51 )
Adjusted net income (non-GAAP) $ 46,078   $ 50,324   $ 44,233   $ 40,601   $ 33,728  
Amortization of intangibles   1,426     1,195     1,251     1,310     1,366  
Tax effect of adjustments noted above(2)   (299 )   (260 )   (265 )   (291 )   (303 )
Adjusted tangible net income (non-GAAP) $ 47,205   $ 51,259   $ 45,219   $ 41,620   $ 34,791  
Tangible Assets and Tangible Shareholders’ Equity      
Average shareholders’ equity (GAAP) $ 2,186,794   $ 2,139,095   $ 2,173,408   $ 2,177,537   $ 2,249,667  
Average intangible assets   1,011,557     967,005     967,154     968,441     965,430  
Average tangible shareholders’ equity (non-GAAP) $ 1,175,237   $ 1,172,090   $ 1,206,254   $ 1,209,096   $ 1,284,237  
           
Average assets (GAAP) $ 17,157,898   $ 16,577,840   $ 16,645,481   $ 16,631,290   $ 16,697,264  
Average intangible assets   1,011,557     967,005     967,154     968,441     965,430  
Average tangible assets (non-GAAP) $ 16,146,341   $ 15,610,835   $ 15,678,327   $ 15,662,849   $ 15,731,834  
           
Shareholders’ equity (GAAP) $ 2,187,300   $ 2,136,016   $ 2,092,281   $ 2,116,877   $ 2,137,642  
Intangible assets   1,014,415     1,015,884     966,461     967,713     969,022  
Tangible shareholders’ equity (non-GAAP) $ 1,172,885   $ 1,120,132   $ 1,125,820   $ 1,149,164   $ 1,168,620  
           
Total assets (GAAP) $ 17,474,083   $ 16,988,176   $ 16,471,099   $ 16,618,101   $ 16,863,757  
Intangible assets   1,014,415     1,015,884     966,461     967,713     969,022  
Total tangible assets (non-GAAP) $ 16,459,668   $ 15,972,292   $ 15,504,638   $ 15,650,388   $ 15,894,735  
           
Adjusted Performance Ratios          
Return on average assets (GAAP)   1.09 %   1.11 %   1.11 %   0.96 %   0.81 %
Adjusted return on average assets (non-GAAP)   1.09     1.20     1.05     0.98     0.82  
Return on average tangible assets (non-GAAP)   1.19     1.20     1.20     1.04     0.89  
Adjusted pre-provision net revenue to average assets (non-GAAP)   1.51     1.73     1.60     1.31     1.04  
Adjusted return on average tangible assets (non-GAAP)   1.19     1.30     1.14     1.07     0.90  
Return on average equity (GAAP)   8.55     8.58     8.50     7.31     6.05  
Adjusted return on average equity (non-GAAP)   8.55     9.33     8.07     7.48     6.08  
Return on average tangible equity (non-GAAP)   16.29     15.98     15.64     13.50     10.93  
Adjusted return on average tangible equity (non-GAAP)   16.29     17.35     14.87     13.81     10.99  
           
Adjusted Diluted Earnings Per Share      
Average diluted shares outstanding   56,270,219     56,335,446     56,248,720     56,182,845     56,081,863  
           
Diluted earnings per share (GAAP) $ 0.82   $ 0.82   $ 0.83   $ 0.71   $ 0.60  
Adjusted diluted earnings per share (non-GAAP) $ 0.82   $ 0.89   $ 0.79   $ 0.72   $ 0.60  
           
Tangible Book Value Per Share          
Shares outstanding   56,073,658     55,953,104     55,953,104     55,932,017     55,880,666  
           
Book value per share (GAAP) $ 39.01   $ 38.18   $ 37.39   $ 37.85   $ 38.25  
Tangible book value per share (non-GAAP) $ 20.92   $ 20.02   $ 20.12   $ 20.55   $ 20.91  
           
Tangible Common Equity Ratio          
Shareholders’ equity to assets (GAAP)   12.52 %   12.57 %   12.70 %   12.74 %   12.68 %
Tangible common equity ratio (non-GAAP)   7.13 %   7.01 %   7.26 %   7.34 %   7.35 %
Adjusted Efficiency Ratio          
Net interest income (FTE) (GAAP) $ 138,529   $ 140,565   $ 132,435   $ 115,321   $ 101,383  
           
Total noninterest income (GAAP) $ 37,293   $ 33,395   $ 41,186   $ 37,214   $ 37,458  
Gain on sale of MSR           2,960          
Total adjusted noninterest income (non-GAAP) $ 37,293   $ 33,395   $ 38,226   $ 37,214   $ 37,458  
           
Noninterest expense (GAAP) $ 107,708   $ 101,582   $ 101,574   $ 98,194   $ 94,105  
Amortization of intangibles   1,426     1,195     1,251     1,310     1,366  
Merger and conversion expense       1,100             687  
Restructuring charges (benefit)               1,187     (455 )
Voluntary reimbursement of certain re-presentment NSF fees       1,255              
(Recovery of) provision for unfunded commitments   (1,500 )   183         450     (550 )
Total adjusted noninterest expense (non-GAAP) $ 107,782   $ 97,849   $ 100,323   $ 95,247   $ 93,057  
           
Efficiency ratio (GAAP)   61.26 %   58.39 %   58.50 %   64.37 %   67.78 %
Adjusted efficiency ratio (non-GAAP)   61.30 %   56.25 %   58.78 %   62.44 %   67.02 %
           
Core Net Interest Income and Core Net Interest Margin      
Net interest income (FTE) (GAAP) $ 138,529   $ 140,565   $ 132,435   $ 115,321   $ 101,383  
Net interest income collected on problem loans   392     161     78     2,276     434  
Accretion recognized on purchased loans   670     625     1,317     2,021     1,235  
Non-core net interest income $ 1,062   $ 786   $ 1,395   $ 4,297   $ 1,669  
Core net interest income (FTE) (non-GAAP)(1) $ 137,467   $ 139,779   $ 131,040   $ 111,024   $ 99,714  
           
Net interest margin (GAAP)   3.66 %   3.78 %   3.54 %   3.11 %   2.76 %
Core net interest margin (non-GAAP)   3.63 %   3.76 %   3.50 %   3.00 %   2.71 %
           
Core Loan Yield          
Loan interest income (FTE) (GAAP) $ 163,970   $ 147,519   $ 124,614   $ 107,612   $ 97,001  
Net interest income collected on problem loans   392     161     78     2,276     434  
Accretion recognized on purchased loans   670     625     1,317     2,021     1,235  
Core loan interest income (FTE) (non-GAAP)(1) $ 162,908   $ 146,733   $ 123,219   $ 103,315   $ 95,332  
           
Loan yield (GAAP)   5.68 %   5.19 %   4.57 %   4.12 %   3.88 %
Core loan yield (non-GAAP)   5.64 %   5.16 %   4.52 %   3.96 %   3.82 %

(1) Core net interest income (FTE) and Core loan interest income (FTE) include Interest income on PPP loans.(2) Tax effect is calculated based on the respective periods’ effective tax rate excluding the impact of discrete items.

Contacts: For Media: For Financials:
  John S. Oxford James C. Mabry IV
  Senior Vice President Executive Vice President
  Chief Marketing Officer Chief Financial Officer
  (662) 680-1219 (662) 680-1281

 

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