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Renasant (RNST) Q2 Earnings call transcript Jul 24, 2024

AInvestThursday, Jul 25, 2024 1:25 pm ET
1min read

Renasant Corporation recently held its second-quarter earnings call, providing insights into its financial performance and future prospects. The call, led by Chief Accounting Officer Kelly Hutcheson, featured updates from key executives Mitchell Waycaster, Kevin Chapman, James Mabry, and David Meredith, along with questions from analysts. Here are the major takeaways from the call.

Financial Performance and Outlook

Renasant reported solid financial progress in the second quarter, with a balance sheet that remains strong, driven by growth in traditional deposits that funded an increase in loans. Asset quality metrics continued to reflect the company's strong credit culture, and credit reserves remained at historically high levels. The income statement showed ongoing efforts to control expenses and stabilize margins. Despite selling Renasant Insurance, the company expressed confidence in its future growth prospects.

Capital Priorities and M&A

The sale of Renasant Insurance will bring in a $36 million gain, which the company plans to utilize for organic growth, M&A, or capitalizing on new opportunities. The company's priorities remain focused on retaining earnings, organic growth, and M&A, should it return. The company's optimistic about its ability to add relationships, market share, and scale in Southeastern markets, aiming for mid-single-digit net growth going forward.

Loan Yields and Deposit Costs

Loan yields increased 11 basis points quarter-over-quarter, driving an increase in loan interest income. Deposits continued to perform well, with traditional retail deposits increasing $200 million, allowing $184 million in broker deposits to mature. Noninterest income increased for the first time since Q1 of '23, despite reporting a decline in total noninterest income. Deposit costs increased, but the pace of increase slowed this quarter, and noninterest expense increased $800,000 from the first quarter, primarily due to higher mortgage volumes.

Credit Metrics and Asset Quality

Renasant recorded a credit loss provision of $3.3 million, with net charge-offs primarily comprised of a single credit. Asset quality metrics showed a decline in criticized loans, while nonperforming assets ticked up slightly. The company remains vigilant in monitoring credit risk, aiming to identify potential losses early and work towards resolution to mitigate losses.

Market Outlook and Competition

The company remains optimistic about its future, believing opportunities to add relationships, market share, and scale in Southeastern markets will enable growth in shareholder value. The loan pipeline remains strong, with $130 million in the 30-day pipeline, yielding $104 million growth in loans. The company continues to navigate a competitive environment, with deposit costs moderating but still remaining high.

In conclusion, Renasant Corporation's second-quarter earnings call highlighted a solid financial performance, with a focus on growth opportunities and managing expenses. The company's optimism for the future, coupled with strategic initiatives, positions it well for future growth.

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