RENASANT CORP Q1 FY2025 earnings call

• Completed merger with First Bancshares on April 1 and welcomed their team.
• First quarter results showed solid profitability, growth in loans and deposits.
• Balance sheet grew $237 million linked quarter, with loan portfolio up $171 million and securities up $147 million.
• Deposits increased $200 million linked quarter, with noninterest-bearing or lower costing deposits.
• All regulatory capital ratios are well capitalized, book value and tangible book value per share increased.
• Credit quality metrics improved, credit loss provision recorded, net recoveries $125,000, ACL as percentage of total loans decreased 1 basis point.
• Adjusted pre-provision net revenue increased due to growth in net interest and non-interest income and expense management.
• Focus on successfully integrating First Bancshares and achieving higher profitability with organic growth.

Net interest income was $134.2 million, an increase of $1.3 million on a linked quarter basis. Loan growth was $170.6 million linked quarter. Total deposits increased approximately $200 million linked quarter with growth in noninterest-bearing deposits accounting for $137 million of growth. Non-interest income increased $2.2 million from the fourth quarter of last year. The loan portfolio increased $171 million, representing a 5.4% annualized growth rate. Total footings grew $237 million on a linked-quarter basis. Securities purchased during the quarter contributed to an increase of $147 million quarter-over-quarter. Capital ratios are in excess of required minimums, book value per share increased 1.6% and tangible book value per share increased 2.7% quarter-over-quarter. Credit loss provision on loans was $4.8 million. Adjusted pre-provision net revenue increased $3.3 million. Adjusted net interest margin increased 8 basis points to 3.42% for the quarter. Adjusted loan yields decreased 8 basis points to 6.19% and total cost of deposits decreased by 13 basis points to 2.22%. Adjusted efficiency ratio improved by 1.4 percentage points.

• Q2 net growth likely in low single-digit range.
• Expense saves to show up in income statement after early August conversion.
• Capital flexibility with roughly 60 to 80 basis points accretion in coming periods, providing optionality for share repurchases and other capital uses.
• Q2 expected to have less clarity on efficiency compared to later quarters, with progress to be detailed in future quarters.

• Changes in mix and cost of funding sources.
• Interest rate fluctuation.
• Regulatory changes.
• Portfolio performance risks, including exposure to economic uncertainties like tariffs and government spending impacts.

Q: Curious about wealth management business and any changes to run rate or revenues?

A: Wealth management has consistency with over $6 billion in assets under management, sees upside going forward.

Q: Thoughts on loan book of combined company and any deemphasis?

A: Loan book is similar geographically, asset concentration, underwriting, etc., to Renasant's, so no changes seen.

Q: Updates on deal marks, cost saves, integration timing?

A: Timing of cost saves unchanged, conversion slated for early August, purchase accounting assumptions mostly unchanged except for rate mark which is smaller than previously expected.

Q: Margin outlook pro forma?

A: Core NIM could expand 10-15 basis points in Q2 from Q1, all-in NIM benefits another 10-15 basis points, total 20-30 basis points overall. Bond book remixing nearly completed with over 50% sold and reinvested.

Q: Exposure to tariffs and economic costs in commercial portfolio?

A: Little direct impact in primary government markets, but ongoing conversations with customers to assess individual impacts, contingency plans in place if volatility continues.

Q: Resilience in mortgage banking group and Q2 outlook?

A: Mortgage had uptick leading into quarter end, pipeline built, activity dependent on rate volatility, but positioned well with hiring and products.

Q: Capital discussion and share repurchases?

A: Capital flexibility with higher ratios, EPS accretion slightly lower post-close, no share repurchase activity in Q1, evaluating returns for buybacks vs other uses.