Renasant's Q3 2025: Contradictions Emerge on Loan Growth Projections, Expense Savings Timelines, and Deposit Strategies

Date of Call: October 29, 2025

Financials Results

• EPS: Net income $59.8M, $0.63 per diluted share; adjusted earnings $72.9M, $0.77 per diluted share (adjusted excludes merger charges)

Guidance:

• Q4 core noninterest expense expected to decline ~$2M–$3M, with an additional ~$2M–$3M reduction in Q1 '26.
• Adjusted margin: modest contraction expected in Q4; modest expansion in 2026 assuming four rate cuts between now and year-end 2026.
• Mid-single-digit normalized loan (and targeted matching deposit) growth remains the run rate; Q4 may see elevated prepayments if long rates fall.
• Majority of merger/conversion expenses recorded through Q3; modest residuals expected in Q4.
• Capital ratios expected to grow ~60–70 bps by year-end 2026; buyback and other capital uses under active consideration.

Business Commentary:

* Loan Growth and Integration: - Renasant Corporation reported loan growth of $462 million on a linked-quarter basis, equivalent to an annualized 9.9% increase. - This growth was driven by the successful integration of The First, with the conversion taking place in early August, leading to a combined team effort.

• Capital and Profitability:
• Renasant's adjusted return on average assets improved by 12 basis points year-over-year, reaching 1.09%.

• The improvement in profitability is attributed to the efficient integration of The First and cost synergies resulting from the merger.

• Deposit Trends:

• Deposits were down $158 million from the second quarter, primarily due to a $169 million seasonal decrease in public funds.

• The decrease in public funds was the key factor behind the decline in total deposits.

• Capital Management and Buyback:

• Renasant announced a new buyback program and redeemed $60 million of sub debt post-quarter.
• The capital management strategy is supported by strong financial performance and capital ratio growth, with expectations for ratios to increase between 60 and 70 basis points by year-end 2026.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted systems conversion completion and strong loan growth (~$462M, 9.9% annualized), net income of $59.8M ($0.63) and adjusted EPS $0.77, improved adjusted ROAA of 1.09% (+12 bps YOY) and ROTCE 14.22% (+296 bps). They emphasized momentum, modeled synergies and additional efficiency gains ahead.

Q&A:

• Question from Stephen Scouten (Piper Sandler & Co., Research Division): Everyone. Really nice quarter here. Loan growth was particularly encouraging. Can you give any color around what you're seeing from a pipeline perspective? And maybe also around specifically the legacy SBMS markets, maybe in and around the Gulf Coast potential strength you're seeing there that's helping fuel the strong growth?
  Response: Loan growth was broad-based across geographies and channels; Gulf Coast (legacy The First) is contributing as lenders leverage Renasant's larger balance sheet and specialized lending capabilities, producing immediate referral-driven wins.

• Question from Stephen Scouten (Piper Sandler & Co., Research Division): Great. Appreciate that color, Kevin. Maybe just curious about pace of expense saves from here kind of how much maybe you've been able to extract so far and kind of what we can think about in terms of further expense states from the deal and kind of the path as we maybe look at a good 1Q '26 run rate, that sort of thing?
  Response: Expect ~ $2–3M decrease in core noninterest expense in Q4 and another ~$2–3M decrease in Q1 as conversion-related costs abate and modeled synergies begin to show.

• Question from Stephen Scouten (Piper Sandler & Co., Research Division): Okay. Fantastic. That's really helpful, Jim. And then just lastly for me, I really appreciate how you guys broke out kind of accretion in your slide deck. What's kind of a good baseline assumption of the normal accretion expected? Is it around that, I guess, it was $12.4 million. Is that right? Or maybe the interest rate component of that was about $9.8 million, if I'm doing the math right. Is that a good way to think about forward accretion?
  Response: Scheduled accretion should track close to Q3 levels; accelerated accretion will vary with loan prepayment activity, so it's hard to predict precisely.

• Question from Matt Olney (Stephens Inc., Research Division): I want to ask more about that core margin in the third quarter, saw some good expansion with that. Any more color on the drivers of that expansion? And then I guess if we look forward, I think you mentioned on a previous call that you thought it could -- core margin would maybe flatten out as we got towards the fourth quarter. Is that still the view of the fourth quarter core margin.
  Response: Q3 saw modest core margin expansion; we expect modest contraction in Q4, then modest expansion in 2026 assuming four rate cuts between now and year-end 2026.

• Question from Matt Olney (Stephens Inc., Research Division): Just to clarify, you said that assumes 4 rate cuts between -- including today, I assume, between now and the end of next year. Is that right?
  Response: Yes — the forward margin outlook assumes four rate cuts through year-end 2026.

• Question from Matt Olney (Stephens Inc., Research Division): Okay. That's helpful. And then I guess switching over to credit quality. We did see criticized loans jump up in the third quarter. Any color on the driver of that jump up of criticized loans?
  Response: Increase was broad-based: one multifamily loan (~25% of increase) underperforming but strong asset expected to payoff early '26; two C&I credits (~33%); some migration in self-storage and one senior housing asset — management sees no current loss exposure.

• Question from Michael Rose (Raymond James & Associates, Inc., Research Division): Just on the new buyback that you guys announced, -- good to see you guys are going to be building capital, but you haven't bought back really any stock since 2021. Just wanted to see where that currently plays in your thought process, particularly given the fact that you've just here recently completed a deal, there's probably other deals out there. It seems like the environment is good. Just wanted to kind of run down the thought process on capital as we move forward.
  Response: With conversion complete and visible capital generation, management expects capital ratios to grow ~60–70 bps by year-end 2026; buybacks are an active lever under consideration alongside other uses (redeemed $60M sub debt; increased dividend).

• Question from Michael Rose (Raymond James & Associates, Inc., Research Division): Very helpful. And then maybe if I can just ask a question on deposits. You guys' loan to deposit ratio is now kind of approaching 90%. It's the highest it's been since basically the beginning of COVID. Can you just talk about some of the deposit growth strategy? I know there's always some seasonality with muni deposits, too, but the general trend has been upward over the past few years. And just wanted to get a better sense of your plans for deposit growth juxtaposed with the rate environment?
  Response: Goal is to grow core deposits in line with loan growth; Q3 deposit decline was seasonal (public funds); management expects funding/ deposit growth to be a top, persistent priority and believes some public funds may return in Q4.

• Question from Michael Rose (Raymond James & Associates, Inc., Research Division): Really appreciate the color. Maybe if I could just sneak one last one in. I appreciate the near-term color on expenses. I know it's something we all struggle with in modeling as we go through a deal, especially at the size. But just as we think about kind of the combined franchise now that systems conversion has happened, are there other areas and levers that you guys can pull to kind of generate the positive operating leverage as we kind of move forward? I'm just trying to better appreciate some of the opportunities, maybe at legacy Renasant now that you have the cost saves from the deal and the accretion from the deal?
  Response: Yes — operating leverage will come from ongoing expense discipline plus revenue lift from getting scale (higher loan growth, better returns on existing expenses); management expects continued efficiency and revenue conversion from above-average loan growth.

• Question from David Bishop (Hovde Group, LLC, Research Division): Kevin, quick question in the preamble. It sounded like maybe you were surprised in terms of the lack of payoffs this quarter? And maybe last, just curious if you have like line of sight into potential payoffs into the next quarter? And if they didn't occur, maybe what's delaying or are there borrowers sort of waiting for lower rates? Just curious if there's any way to ring-fence maybe potential headwinds into the coming quarter or next, if that's possible.
  Response: Payoffs were more muted than expected; management watches the 10-year (~4% threshold) as a key prepayment indicator — payoffs may increase as the 10-year drops below ~4%; monitoring customer intent into Q4.

• Question from David Bishop (Hovde Group, LLC, Research Division): Got it. And then obviously, you're cognizant of the significant amount of M&A activity in your backyard or backyard, so to speak, Just curious how aggressive you think you're going to be in terms of recruiting some of that talent and commercial clients that could dislodge from those acquisitions. And is the opportunity set big enough to -- I know The First merger just closed, but is the opportunity there to sort of replace whole bank M&A with lift out of talent?
  Response: We see opportunities to hire talent and win customers amid regional disruption; in Q3 we hired ~10 market presidents/prominent lenders and sometimes can gain customers without hires given overlap — management views the environment as a recruiting and share-gain opportunity.

• Question from Catherine Mealor (Keefe, Bruyette, & Woods, Inc., Research Division): I want just to circle back on expenses, just to kind of be on maybe looking at the expense trajectory into '26. So if I lower expenses per what you're talking about, Jim, kind of somewhere around $2 million to $3 million each of the next 2 quarters. I'm kind of starting next year at a $161 million base. And if I just annualize that number, basically where consensus is for '26 in expenses, which is $645 million. And so as I'm thinking about that, I mean, do you feel like we're in a position where you're where you're lowering expenses in the next 2 quarters and then were flat? Or should we actually grow a little bit off of that base in the first quarter of '26, just kind of given better revenue growth and opportunities in your markets?
  Response: Management would guide to consensus expense levels for 2026 or a touch better; expect a clean Q1 run rate with some merit-related expense impact mid-year, so consensus ~$645M is reasonable or slightly better.

• Question from Catherine Mealor (Keefe, Bruyette, & Woods, Inc., Research Division): Okay. That's awesome. Very helpful. And then on the deposit side, it was interesting to see deposits up a little bit this quarter. And I know that's the mix change, and now we'll have the benefit of 2 cuts. But we're hearing from a lot of other banks this quarter, the deposit costs are getting more and more competitive. And so just curious on how you're kind of thinking about deposit costs and betas over the next few cuts relative to what we've seen over the past 100 basis points of cuts?
  Response: Expect betas for interest-bearing deposits and loans in the mid-30s for 2026; deposit cost pressures remain tough and improvement has been slow; special CD pricing has been stable for several quarters.

• Question from Sun Young Lee (TD Cowen, Research Division): Clearly, driving improved returns and increasing profitability, it looks like that is one of the key goals for you, Kevin. In terms of like expectations being raised further on your internally, I guess, for Renasant and leading with that increased profitability. Aside from the expense side on the revenue side, can you just give us like what you mean by that? And like what kind of examples are there that -- is it employees like the bankers bringing in more like low-cost deposits or bringing in more like fee income products? What does that mean?
  Response: Improved profitability means achieving greater scale and return at the individual and market level — higher loan and deposit per banker/market, stricter accountability, and generating more revenue from existing resources (more deposits, loans, fee products) with fewer employees.

• Question from Sun Young Lee (TD Cowen, Research Division): Got it. And in terms of your -- on the loan and deposit growth. So you mentioned mid-single-digit sort of growth for you guys on a normalized basis. I get that the payoffs were a little elevated -- I mean, not elevated the other way around, were smaller than expected. So do you still think that mid-single digits is sort of a good run rate for you? Or could we expect little bit higher in terms of both deposit and loan growth.
  Response: Still targeting mid-single-digit normalized growth (loans and deposits); management wants to observe Q4 payoff behavior before resetting targets, but remains focused on finding growth opportunities to exceed that baseline when possible.

Contradiction Point 1

Loan and Deposit Growth Projections

It involves changes in financial growth projections, specifically regarding loan and deposit growth targets, which are crucial for understanding the bank's strategic direction and investor expectations.

Can you provide more details on the pipeline? - Stephen Scouten(Piper Sandler & Co.)

2025Q3: We have guided to 5% to 6% annual loan growth in 2025 and '26. And as we sit here today, we feel very good about achieving that growth rate. - Kevin Chapman(CEO)

Can you discuss pipelines, hiring efforts, and growth benefits from the combined company's larger balance sheet? - Michael Edward Rose(Raymond James & Associates)

2025Q2: We are guiding towards mid-single-digit loan and deposit growth for the rest of the year, but payoffs could weigh on that. - Kevin Chapman(CEO)

Contradiction Point 2

Expense Savings Timeline and Expectations

It involves changes in the timeline and expectations for expense savings, which are critical for determining the bank's operational efficiency and profitability.

What's the current pace of expense savings, how much has been achieved to date, the potential for additional savings from the deal, and the path toward a Q1 2026 run rate? - Stephen Scouten(Piper Sandler & Co.)

2025Q3: We expect a $2-3 million decrease in Q4 and another $2-3 million decrease in 1Q '26. - James Mabry(CFO)

Could you clarify the expected core expense levels in the next few quarters, incorporating cost savings, and confirm if the initial full quarter of cost savings remains projected for Q1 next year? - Matthew Covington Olney(Stephens Inc.)

2025Q2: There are virtually no efficiencies reflected in Q2 from the merger, but these will start to show up in Q3 post-systems conversion. Efficiencies will continue to ramp up in Q4. The goal is to have a clean income statement reflecting all efficiencies by Q1. - James Mabry(CFO)

Contradiction Point 3

Loan Growth and Pipeline

It directly impacts expectations regarding the company's growth strategy, particularly around loan growth and the health of the loan pipeline.

Can you provide insight into current pipeline developments and the strength in legacy SBMS markets, particularly in the Gulf Coast, that are driving strong growth? - Stephen Scouten(Piper Sandler & Co., Research Division)

2025Q3: Loan growth is expected to continue in Q4 and beyond. The Gulf Coast region shows good growth, with opportunities for Renasant's larger balance sheet and specialized lending capabilities. The combination of Renasant and The First has produced immediate successes. - Kevin Chapman(CEO)

Can you provide an update on loan pipelines for Q2? - Michael Rose(Raymond James)

2025Q1: Loan production rose to $645 million, with strong contributions across markets and credit types. Q2 growth is expected to be in the low single digits. The economic outlook and payoffs will be key factors. - Mitchell Waycaster(CEO)

Contradiction Point 4

Deposit Growth Strategy

It affects the company's strategy for maintaining financial stability, particularly in relation to managing deposit growth and loan-to-deposit ratios.

Can you discuss your deposit growth strategy as your loan-to-deposit ratio approaches 90%? - Michael Rose(Raymond James & Associates, Inc., Research Division)

2025Q3: We aim for core deposit growth to equal loan growth. Seasonal declines in public funds affected Q3, but we focus on core deposit growth. - James Mabry(CFO)

Can you provide an update on the loan pipeline and discuss Q2 outlook? - Michael Rose(Raymond James)

2025Q1: Our loan-to-deposit ratio was 87%, which reflects our strong deposit base and capital position. The return of excess liquidity into our core deposit base continues to be a focus. - Kevin Chapman(CEO)

Contradiction Point 5

Expense Saves and Integration Timing

It potentially affects the company's financial performance post-merger and the timeline for realizing expected synergies.

Can you provide an update on the pace of expense savings achieved to date, the expected savings from the deal, and the path to a 1Q '26 run rate? - Stephen Scouten(Piper Sandler & Co., Research Division)

2025Q3: In Q3, core noninterest expenses increased due to health and life insurance, occupancy, and FAS 91. We expect a $2-3 million decrease in Q4 and another $2-3 million decrease in 1Q '26. - James Mabry(CFO)

Have there been any major changes to the Mark deal or updates on the timing of cost savings and integration? - Stephen Scouten(Piper Sandler)

2025Q1: Cost-savings should start to appear after August's conversion. - James Mabry(CFO)