Earnings call transcript: Renasant beats Q1 2025 forecasts, stock surges

Renasant Corporation reported strong financial results for the first quarter of 2025, surpassing analysts’ expectations with an earnings per share (EPS) of $0.66, compared to the forecasted $0.52. Revenue reached $170.59 million, exceeding the anticipated $170.14 million. Following the announcement, Renasant’s stock rose by 7.34%, reflecting investor confidence in the company’s performance and strategic direction. According to InvestingPro data, the company has maintained consistent profitability with trailing twelve-month revenue of $706.58 million and a healthy revenue growth of 14.55%.

Key Takeaways

• Renasant’s EPS and revenue both exceeded expectations, signaling robust financial health.
• The company successfully integrated First Bank shares, enhancing its market position.
• Deposits increased by $200 million, supporting growth in interest income.
• Stock price surged 7.34% post-earnings, nearing its 52-week high.
• Economic uncertainty remains a challenge, though proactive measures are in place.

Company Performance

Renasant Corporation demonstrated solid performance in Q1 2025, building on its historical trend of steady growth. The company reported $41.5 million in earnings, or $0.65 per diluted share, and net interest income of $134.2 million, marking a $1.3 million increase quarter-over-quarter. Loan growth was strong at an annualized rate of 5.4%, with total deposits rising by $200 million. InvestingPro analysis indicates the company trades at an attractive P/E ratio of 9.35x and maintains a solid dividend history spanning 33 consecutive years, with a current yield of 3.07%.

Financial Highlights

• Revenue: $170.59 million, above the forecast of $170.14 million.
• Earnings per share: $0.66, surpassing the expected $0.52.
• Net interest income: $134.2 million, up $1.3 million from the previous quarter.
• Loan growth: $170.6 million, representing a 5.4% annualized increase.
• Total deposits: Increased by $200 million, with noninterest-bearing deposits up by $137 million.

Earnings vs. Forecast

Renasant’s earnings per share of $0.66 exceeded the forecast by approximately 26.9%, while revenue surpassed expectations by $450,000. This significant beat reflects the company’s strong operational execution and strategic initiatives, such as the successful merger with First Bank shares.

Market Reaction

Following the earnings release, Renasant’s stock price increased by 7.34%, reaching $30.73. This positive movement places the stock closer to its 52-week high of $39.63, indicating strong market confidence in the company’s future prospects. InvestingPro analysis suggests the stock is currently undervalued, with analysts setting price targets ranging from $34.50 to $45.00. For deeper insights into valuation opportunities, explore the Most Undervalued Stocks list on InvestingPro.

Outlook & Guidance

Looking ahead, Renasant projects low single-digit loan growth for Q2 2025 and anticipates a 20-30 basis point expansion in net interest margin. The company expects cost savings to become more apparent in Q4 2025, with full integration of First Bank shares targeted for a "clean" Q1 2026. With an InvestingPro Financial Health Score of 2.29 (rated as "FAIR") and strong profitability metrics, including an 8% return on equity, the company appears well-positioned for sustainable growth. Discover more detailed analysis in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Mitch Weycaster expressed optimism about Renasant’s future, stating, "We are excited about the prospects for Renaissance to perform well in the periods ahead." Finance Executive Jim Mabry added, "Our goal is to have a very clean Q1 of twenty twenty six," highlighting the focus on integration and efficiency.

Risks and Challenges

• Economic uncertainty could impact future performance, requiring careful monitoring.
• The cost of deposits has decreased, which could pressure margins if reversed.
• Credit risk management remains a priority, indicating vigilance in loan quality.
• Market saturation in certain segments could pose growth challenges.
• Regulatory changes and economic policy shifts may affect strategic plans.

Q&A

During the earnings call, analysts inquired about the integration of First Bank shares, capital deployment strategies, and the outlook for mortgage banking. Management addressed these concerns, emphasizing their proactive approach to growth and risk management.

Full transcript - Renasant Corporation (RNST) Q1 2025:

Conference Operator: Good day, and welcome to the Renaissance Corporation twenty twenty five First Quarter Earnings Conference Call and Webcast. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Kelly Hutchinson, Chief Accounting Officer. Please go ahead.

Kelly Hutchinson, Chief Accounting Officer, Renasant Corporation: Good morning and thank you for joining us for Renasant Corporation’s quarterly webcast and conference call. Participating in the call today are members of Renasant’s executive management team. Before we begin, please note that many of our comments during this call will be forward looking statements, which involve risk and uncertainty. There are many factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward looking statements. Such factors include, but are not limited to, changes in the mix and cost of our funding sources, interest rate fluctuation, regulatory changes, portfolio performance, and other factors discussed in our recent filings with the Securities and Exchange Commission, including our recently filed earnings release, which has been posted to our corporate site, www.renaissance.com at the press releases link under the news and market data tab.

We undertake no obligation and we specifically disclaim any obligation to update or revise forward looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes to future operating results over time. In addition, some of the financial measures that we may discuss this morning are non GAAP financial measures. A reconciliation of the non GAAP measures to the most comparable GAAP measures can be found in our earnings release. And now I will turn the call over to our Executive Vice Chairman and Chief Executive Officer, Mitch Weycaster.

Mitch Weycaster, Executive Vice Chairman and CEO, Renasant Corporation: Thank you, Kelly. Good morning. We appreciate you joining the call. The first quarter results reflect a good start to the year with solid profitability and growth in loans and deposits. As you know, on April, we completed the merger with First Bank shares, and we welcome their team to Renaissance.

Our focus remains steadfast on successfully bringing two strong companies together and achieving higher profitability with solid organic growth. While the economic outlook contains uncertainty, we are excited about the prospects for Renaissance to perform well in the periods ahead. I will now turn the call over to Kevin.

Kevin, Executive (Likely CFO), Renasant Corporation: Thank you, Mitch. Before we dive into the quarter’s results, I too want to welcome the team from the first to Renaissance. We successfully closed the merger less than a month ago, and the conversion and integration teams have been hard at work to orient our new team members, align our management teams, and continue to meet the needs of our customers. I want to commend all employees of the combined company for their diligence, patience, and flexibility throughout these past several weeks. With the early success we’re experiencing, I am excited about the future opportunities for Renasant.

I will now turn our attention to our first quarter financial results. Our earnings were $41,500,000 or 65¢ per diluted share. Net interest income was a hundred and 30 4 point 2 million dollars, an increase of $1,300,000 on a linked quarter basis. Similar to last quarter, solid loan growth of $170,600,000 linked quarter, coupled with a sizable decline in our cost of deposits, was the driver behind the increase in net interest income. The liability side of the balance sheet presents another positive growth story.

Total deposits increased approximately $200,000,000 linked quarter, with growth in noninterest bearing deposits accounting for a hundred and $37,000,000 of growth. The improvement in deposit mix along with disciplined pricing as rates have fallen resulted in a decrease in total cost of deposits of 13 basis points from the prior quarter. Noninterest income increased $2,200,000 from the fourth quarter of last year. Seasonality in our mortgage division drove an increase in mortgage banking income of $1,300,000 accounting for the majority of the overall increase in non interest income. Non interest expense was a hundred and $13,900,000 for the first quarter.

Excluding merger and conversion expenses, non interest expense was a hundred and $13,100,000 for the quarter, representing an increase of $415,000 linked quarter. We will continue to work diligently to manage our expenses as we work to efficiently integrate the first this year. Overall, we had a strong quarter marked by solid balance sheet growth, disciplined pricing, and expense management. Before turning the call over to Jim to discuss financials, I would like to thank Mitch for his service and outstanding leadership as CEO of Renasant during the past seven years. During Mitch’s leadership, Renasant Bank grew to become a $26,000,000,000 financial services company with more than 300 locations and over 3,100 employees throughout the Southeast.

Additionally, Mitch’s steady hand and calming approach helped us navigate several significant events during his tenure such as the pandemic and the bank failures of 2023. On behalf of our employees, customers, communities, and shareholders, Mitch, we congratulate you on your success during your tenure as CEO and are excited that you will remain a part of the team as executive vice chair. I will now turn the call over to Jim.

Jim, Executive (Likely Finance), Renasant Corporation: Thank you, Kevin. And I echo your comments about Mitch and his leadership. I have really enjoyed and benefited from serving under Mitch these past five years. I’ll begin with highlights from the balance sheet. Total footings grew $237,000,000 on a linked quarter basis.

We experienced another quarter of strong loan growth, driving an increase to our loan portfolio of $171,000,000 which represents a 5.4% annualized growth rate. We also purchased securities during the quarter, which contributed to an increase of $147,000,000 quarter over quarter. This asset growth was primarily funded by growth in deposits, which increased $200,000,000 on a linked quarter basis. This growth came in the form of either non interest bearing or otherwise lower costing deposits as we reduced higher costing time deposits from year end. From a capital standpoint, all regulatory capital ratios are in excess of required minimums to be considered well capitalized.

And our book value per share and tangible book value per share increased one point six percent and two point seven percent, respectively, quarter over quarter. Turning to asset quality, we experienced improvement in all of our credit quality metrics. A cornerstone of our credit risk management strategy is to proactively identify underperforming loans early and work quickly towards resolution in order to mitigate loss, and our team executed this strategy well during the quarter. We recorded a credit loss provision on loans of $4,800,000 comprised of $2,100,000 attributable to funded loans and $2,700,000 attributable to unfunded commitments. We experienced growth in our commitments to finance construction projects, which we expect to fund over the next twelve to twenty four months, driving the need for provision for unfunded commitments in the first quarter.

Net recoveries were $125,000 and the ACL as a percentage of total loans decreased one basis point quarter over quarter to 1.56%. Turning to the income statement, our adjusted pre provision net revenue increased $3,300,000 driven by growth in both net interest income and non interest income and effective management of non interest expense. Our adjusted net interest margin, which excludes purchase accounting accretion and interest recoveries, increased eight basis points to 3.42% for the quarter. Adjusted loan yields decreased eight basis points to 6.19%, and the total cost of deposits decreased by 13 basis points to 2.22%. Kevin commented on the highlights within non interest income and expense.

The improvement in net revenue coupled with stable expenses resulted in an improvement in our adjusted efficiency ratio of 1.4 percentage points. We’re encouraged by the results of the first quarter and the momentum building for the remainder of 2025. We look forward to bringing you results of our combination with the first at the end of the second quarter. I will now turn the call back over to Mitch.

Mitch Weycaster, Executive Vice Chairman and CEO, Renasant Corporation: Thank you, Jim. As Kevin noted, we have made good progress on merger integration. Renasant not only operates in some of the best banking markets in the country, but is also positioned to accelerate profitability improvement in upcoming quarters. On a personal note, I appreciate the kind words from Kevin and Jim. It’s been a blessing serving with this outstanding team for forty six years, and I look forward to continuing my service as executive vice chair in semi retirement.

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

Conference Operator: We will now begin the question and answer session. Our first question comes from Stephen Scalton with Piper Sandler. Please go ahead.

Stephen Scalton, Analyst, Piper Sandler: Hey, guys. Good morning. Appreciate it. Good morning. So I’m curious, one, first in Steve, it looked like another really strong quarter in wealth management.

Have there been any larger scale changes to that business or anything that’s of changed the run rate or the potential of revenues overall? Anything kind of notable there based on the last couple of quarters?

Executive, Renasant Corporation: Stephen, good morning. I think it’s more a story of consistency in that space. We find ourselves today just over $6,000,000,000 in assets under management. And as you look across those various business lines, our ability to integrate that delivery, particularly in the small business commercial space, has continued to produce well for us. We see a lot of upside going forward as we continue to grow that business.

Stephen Scalton, Analyst, Piper Sandler: Okay, great. And then maybe as we think about the deal having closed, curious if it’s probably still very early, but as you’ve gotten into it, anything you look at within the loan book of the combined company and you think maybe you want to work a part of the loan book down or deemphasize anything without throughout the footprint?

David Meredith, Executive, Renasant Corporation: Steve, good morning. This is David Meredith. We realize through our due diligence just the comfort level in their loan book. It’s very similar to our loan book from a geographic standpoint, asset concentration standpoint, the type of transactions they chase, the metrics they use in underwriting, portfolio management, everything lined up very well with what we do. So, we don’t see any changes.

Hopefully, just it’s a springboard to continue to grow further.

Stephen Scalton, Analyst, Piper Sandler: Okay, great. And then just last thing for me. Any updates on kind of were there any major changes to marks with the deal that you guys have disclosed? And then timing of cost saves Have there been any changes or has any of that been able to be pulled forward with the closing of the deal?

Jim Mabry, Finance Executive, Renasant Corporation: Stephen, good morning. It’s Jim Mabry. No, there are no changes in terms of timing. And as you know, we’ve got conversion slated for early August. And so we’ll start to see efficiencies show up in the income statement after that.

But I would say generally the purchase accounting assumptions that we laid out last July are relatively unchanged except for the rate mark. Rates are a little different. And so that mark is not likely to be as large as it was in July, but otherwise pretty much tracking to what we laid out last summer.

Michael Rose, Analyst, Raymond James: Okay. That’s helpful. And so it’s a

Stephen Scalton, Analyst, Piper Sandler: little lower than a little less dilution, but maybe a little less forward accretion as well, but not a major change. Is that right, Jim?

Jim Mabry, Finance Executive, Renasant Corporation: That’s correct.

Michael Rose, Analyst, Raymond James: Perfect. Thanks for the time this

Stephen Scalton, Analyst, Piper Sandler: morning guys. Congrats on a great quarter.

Jim Mabry, Finance Executive, Renasant Corporation: Thank you, Stephen.

Conference Operator: And the next question comes from Michael Rose with Raymond James. Please go ahead.

Michael Rose, Analyst, Raymond James: Good morning, guys. Thanks for taking my questions. I’d be remiss if I didn’t ask Mitch one more time to give an update on loan pipelines as you normally do.

Executive, Renasant Corporation: Well, thank you, Michael, and happy to do that this morning. I’ll start with the pipeline and maybe reflect on production this past quarter and just some thoughts going forward. But we started this quarter with a thirty day pipeline of $189,000,000 That’s a modest increase from $174,000,000 the prior quarter. Would also add, Kevin reflected earlier in opening remarks about the integration and the success at the First early on. In legacy markets of the First, they’re starting with a pipeline of $83,000,000 That’s up from $53,000,000 at the beginning of the year, the prior quarter.

Of course, as you say, we’re starting the quarter with a strong pipeline, just reflecting on the first quarter on production. We saw a nice increase in production, $645,000,000 compared to $572,000,000 the prior quarter. As we usually do, just looking forward, we always comment on payoffs and likely that being the kind of the governor on what net could be in any given quarter, we did see an increase in payoffs this quarter, not unexpected. That was up about $86,000,000 So it resulted in a net of $171,000,000 as Kevin mentioned earlier, about 5.5%. As we think about pipeline and production in the company, we continue to see meaningful contribution from across our markets, our various business lines as well as the type and the size credits.

We saw that again this past quarter with one to four family contributing about 18%, small business, business banking about 24%, commercial credits that in this category would be roughly $3,500,000 or greater about 33%. And then our corporate banking group, larger C and I commercial real estate, ABL, equipment finance, another 25%. So again, we’re certainly not looking just thinking about the pipeline and looking forward, we’re not looking past the potential economic uncertainties in the coming days. Certainly, we’re here to understand and meet the customer financial service needs. And as we’ve done in the past, we’ll certainly remain disciplined in our underwriting and our pricing.

And I would mention again, just looking forward with the economic uncertainty and the timing of payoffs, and that was reflected in this quarter’s net. And given those considerations, just expanding on your question, Q2 could be more in the net growth somewhere in that low single digit range most likely.

Michael Rose, Analyst, Raymond James: That’s very helpful, Mitch. Maybe just another one on expenses. Obviously, with the deal closed. Jim, can you give us any sense of a good starting point before cost saves as we think about kind of the Q2 base just with the two companies combined as a starting point? And then just given pretty good expense control this quarter and whatever is going on at the first, which would just be helpful for a starting point?

Thanks.

Jim Mabry, Finance Executive, Renasant Corporation: Sure, Michael. I mean, as you sort of mentioned, it’s early and we don’t have the clarity that we’re going to have in coming quarters. But, if you look at their quarter and you look at our quarter, we were pleased with our quarter, both on the income statement and balance sheet side. So nothing about their quarter changed any of our thoughts about the model or how things will go from here. And as it relates to expenses, I mean, it’s Q2, I suspect it won’t be as straightforward as this, Michael, but I would suspect you could really take the two expense bases, the most recent quarterly expense basis for both companies, probably layer in a little bit of increase above that for merit increases.

And that’s pretty much what you would probably see. Again, it won’t be perfect, but that’s pretty much what you’d probably see in Q2. From that forward, you’ll start to see the benefit of the efficiencies. And our goal is, we’ve sort of had our internal goal is to have a very clean Q1 of twenty twenty six. And certainly, would say in Q4 of twenty twenty five, we’ll provide investors will get a really good look at the progress we’ve made in terms of efficiency.

So each quarter, we’ll get a little more give a little more clarity and transparency in terms of our progress, but not so much of that in Q2, I would expect.

Michael Rose, Analyst, Raymond James: Helpful. And what was their Q1 expenses? Do you have them handy?

Jim Mabry, Finance Executive, Renasant Corporation: I don’t have them handy. I don’t know what the expense number was, but around $45,000,000 40 6 million dollars is what they’ve been running at.

Michael Rose, Analyst, Raymond James: Okay, perfect. And maybe just one final one for me. I know you guys are tied up with the deal, but any thoughts on share repurchases as we kind of move through the year? I know you guys have the authorization, but just didn’t know your willingness or ability to buy just in light of the deal. Thanks.

Jim Mabry, Finance Executive, Renasant Corporation: Sure. You’re correct. We do have the authorization. We did not have any activity under the authorization in Q1. And it’s a topic, like other uses of capital that we discuss regularly.

In fact, yesterday in our Board meeting, we went through sort of a look at our capital. And I think as you appreciate, the thing that’s different for us here in future periods as opposed to our recent history is that we’re going have more capital flexibility. We’re going to start out with some with good ratios, strong ratios, and we’re going to accrete capital rather nicely, in the coming periods, roughly 60 to 80 basis points a year. And that’s going to provide it provides optionality for us. And buybacks would be one of those possible levers.

What we do and what we’ll be doing in the quarters ahead is evaluating the returns, the merits of a buyback versus other possible uses. So I don’t know, how that’s going to play out, but I would say this, we clearly have the we’ll have capital wherewithal. We want to be good stewards of that capital and make sure it’s providing returns for shareholders. So, whether that’s buybacks or other uses, of course, number one goal is to support the organic growth of the companies.

Michael Rose, Analyst, Raymond James: Perfect. I appreciate you taking all my questions. And Mitch, thank you for all you’ve done over the past many years. It’s been a pleasure working with you and congrats as you move forward.

Executive, Renasant Corporation: Thank you, Michael.

Conference Operator: And the next question comes from Catherine Mealor with KBW. Please go ahead.

Kelly Hutchinson, Chief Accounting Officer, Renasant Corporation0: Thanks. Good morning.

Executive, Renasant Corporation: Good morning, Catherine.

Kelly Hutchinson, Chief Accounting Officer, Renasant Corporation0: One question just on the margin. I was curious, Jim, if you could give us just an updated view on where the margin should come together pro form a. I know there was a little bit of change in rates, but not too much, but just kind of curious what you’re thinking there, especially given the greater margin performance that you had on a base this quarter. And then maybe as a kind of side note to that question on just the bond book that you’re buying from the first, I know you’ve talked about kind of selling or remixing that by about, I think, 60% or so of their bonds you’ve talked about selling and then reinvesting. Know the yields or the market has been all over the place.

So just kind of curious if you already knocked some of that out earlier in the month and kind of how you’re thinking about that with the volatility in rates? Thanks.

Jim Mabry, Finance Executive, Renasant Corporation: Sure. Good morning, Catherine. And as you know, we’re early in this, but I would say, again, there’s we really don’t see anything in their numbers or in our numbers or the environment. There have been obviously, there have been changes, but I think our guidance on margin from what we laid out last July is pretty close to what we feel today. So, I’ll give you some ranges and hopefully that’s helpful.

I think on core NIM, if you take our core NIM for Q1, and this won’t be exact, but this will give you the, I guess, a sense of the impact. I think core NIM could expand 10 to 15 basis points in Q2 from Q1. All in NIM, would benefit another roughly 10 to 15 basis points from what we saw in Q1. And as you appreciate, I mean, there’s in periods going forward, there’s going be some lumpiness in that number just because of prepayment behavior. But I think roughly 10 to 15 on core and another 10 to 15 all in.

So, call it, 20 to 30 basis points altogether for all in NIM. On the bond book, you’re correct. We very soon after the close, we started to engage with their bond book. I think we were pretty much close to being finished with that, not 100%, but pretty close. At the end of the day, we will have sold probably a little over 50% of their bond book and reinvested it.

The other 50%, we’d like those securities. And they met our policies, they had good yields, they had CRA benefits or otherwise. So that is pretty much completed. And I would say, we’re even though the equity markets were obviously very turbulent during this period, the bond markets had some change and some volatility, but the execution there went really well. We’re pleased with how that went.

So I think we’re it was a good first step in terms of, sort of remixing the balance sheet.

Kelly Hutchinson, Chief Accounting Officer, Renasant Corporation0: Great. Very helpful. Thank you.

Executive, Renasant Corporation: Thank you, Ken. And

Conference Operator: the next question comes from Dave Bishop with Hovde Group. Please go ahead.

Michael Rose, Analyst, Raymond James: Yes. Good morning, gentlemen.

Executive, Renasant Corporation: Good morning, Dave. Just curious, guys,

Michael Rose, Analyst, Raymond James: as you sort of scrubbed the loan book for exposure to any segments or any industries that have exposure to the tariffs or other economic policies coming out of D. C. Just curious how far along you are that and maybe what you’re seeing in terms of a deeper dive within your commercial portfolios? Thanks.

David Meredith, Executive, Renasant Corporation: Dave. Good morning. This is David. We’ve looked heavily at our book, and one of the things that benefits us is we do a of community banking, a lot of local type business. Obviously, has some level of impact from whether it be tariffs or reduction in government spending.

We have very little exposure in the primary government markets, D. C, Northern Parts of Virginia. I think we only have a couple of transactions in that marketplace. So, we don’t have a material direct impact there. But obviously, and immigration issues are much farther reaching and impact everything.

So, we continue to have ongoing conversations with each of our opportunities, each of our customers to see what the impact of them individually is because each one is going to be a little bit different to determine is there elasticity within their income statement they can absorb cost of goods sold or when we have new loan conversations, what’s the breakeven, what’s the reserves within construction project. It’s a very robust conversation to make sure we understand the risk within each individual transaction at this point. We’re doing some things more specifically. We’re looking at we’re calling our foreign wires and ACHs just to see which customers do more foreign have more foreign exposure and make more pinpoint a target at this point. As you know, I guess at any point in time, this could change next week.

And so, we’re just doing a very broad brush look at all of our customers and the impact and obviously putting plans in place. If this continues, the volatility continues, economic certainly continues. We may have to do things more specific and that may include things as modifications to underwriting, modifications to guarantee requirements and so forth. And so, are contingency plans we’re putting in place just to determine what the once we assess what the longer term impact is of the economic changes.

Michael Rose, Analyst, Raymond James: Got it. And then maybe just saw the resilience in the mortgage banking group. Just curious, early read into the second quarter, maybe the summer, do you expect a sort of a rebound? Know there’s been a lot of more abundant terms of activity. Just curious what you’re seeing in overall activity within your footprint.

Kevin, Executive (Likely CFO), Renasant Corporation: Yes. Hey, Dave. It’s Kevin. So yes, mortgage is riding the wave of just volatility of the rates that you’re seeing, the ten year, thirty year volatility. We did see an uptick leading into quarter end.

We saw the pipelines build. Chalk that up to seasonality that we typically see. And we still continue to see, although there’s rate volatility, we do continue to see activity in the mortgage business, particularly in the April when rates kind bottomed out, you saw an immediate pop in the pipeline that an increase in the pipeline. You’ve seen that pull back a little bit, but we still have some good activity in mortgage. So we’ll continue to see how Q2 plays out, but we feel good about how we’re positioned with mortgage, with the hiring we did last year, with the products we have, the delivery that we can provide.

We feel very good about mortgage, but just going to it’s going to be very dependent on what happens with rates. And as we all know, we’re expecting that to be volatile throughout Q2.

Michael Rose, Analyst, Raymond James: Got it. Appreciate the color. Thanks.

Conference Operator: And the next question comes from Matt Olney with Stephens. Please go ahead.

Kelly Hutchinson, Chief Accounting Officer, Renasant Corporation1: Hey, thanks. Good morning. Just want to go back to the capital discussion and the potential for the loan mark to be a little bit less at closing. Just any color on what this could mean for capital at closing? I think we talked around the CET1 being just below 11% at closing.

Is this still the thinking? Or could this be a little bit higher given those comments about the loan mark?

Jim Mabry, Finance Executive, Renasant Corporation: Morning, Matt. This is Jim. And you’re correct. You’re spot on. I mean, we take a look at the variances between what we announced last July and what the balance sheet looks like now, and of course, we’re still going through some of those entries, but generally, higher capital.

And I would say that the Q2 CET1 would be probably a touch above 11%. And of course, we’re closing a quarter earlier than what we had modeled back last July. So capital will be a bit higher. The EPS accretion will be a touch lower and of course lower slightly lower TBV dilution. And the earn back, just to give you that as well, is really unchanged.

I think it’s up a tenth of a point in terms of earn back. But hopefully, gives you a sense of capital and the movement between announcement and when we closed.

Kelly Hutchinson, Chief Accounting Officer, Renasant Corporation1: Yes. That’s helpful, Jim. And it sounds like you’ll have more just capital optionality than maybe when we first forecasted the deal. So you addressed the buyback appetite. You’ve also got some sub debt tranches that become callable, I think, later on year and into next year.

Curious just what the appetite is to call those, or refinance those later on this year and into next year?

Jim Mabry, Finance Executive, Renasant Corporation: So you’re correct. We do have those opportunities, and that’s part of what we had in discussion yesterday with the Board was looking at the various opportunities we’ve got for deployment of capital. And so that’s on the list as well. It’s nice to be in a position where we’ve got capital flexibility and Renaissance got that today. The other thing I’d add to that, which helps considerably, particularly when you’re talking about, calling any debt is that we carry a considerable amount of cash at the parent.

We’ve got about three years’ worth of cash at the parent. And that just provides even more flexibility in terms of how we think about that debt and what pieces we want to keep and what pieces we want to go ahead and redeem. So all that’s in the mix. And I think as we as Renasant goes forward in the coming quarters and year or so, particularly with the debt, you’ll see some changes and I think those things will be additive to the earnings of the company.

Kelly Hutchinson, Chief Accounting Officer, Renasant Corporation1: Okay. And then, also I got on the call a few minutes late, so you may have already hit on this. Just any broader comments on deposit competition and loan pricing competition in your core markets just compared to when we talked back in January?

Jim Mabry, Finance Executive, Renasant Corporation: No, it’s I think like others, we it’s certainly very competitive still. But our funding pricing has behaved better than we anticipated and that continues. The real pressure is more on the asset side of the books. I will also add that the first had a really good deposit quarter. They had really strong growth in deposits.

Some of it was public funds, but they had a really strong quarter in terms of their balance sheet and their deposit growth. So it’s really nice that both companies had good quarters going into the closing of the deal. But yes, we’re very pleased with what we’re seeing on the funding side from both companies.

Conference Operator: Okay. Thank you, guys. This concludes our question and answer session. I would like to turn the conference back over to Mitch Weycaster for any closing remarks.

Executive, Renasant Corporation: Thank you, Dave, and thank each of you for joining today’s call, and we appreciate your interest in Renasant.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.