Renasant Corporation (RNST) Earnings

Management highlights

- Overall Financial Performance * Q2 2026 performance maintained the strong growth pace set in Q1 2026, with broad-based improvement in key profitability and efficiency metrics year-over-year. * The company remains focused on organic growth and capturing market share amid ongoing disruption in its operating markets. * All regulatory capital requirements are comfortably met, with credit metrics remaining strong and stable. - Operational Activity * The firm continues to execute on opportunistic talent hiring to expand revenue capacity: 18 new revenue-producing hires in Q1 2026, 5 in Q2 2026, and 7 added so far in Q3 2026. * Core deposit generation remained strong in Q2: over 10,000 new customer accounts were opened, bringing $380 million in new core deposits, with half of that volume in low-cost, sticky checking accounts. * Through July 2026 (early Q3), over 2,000 additional net new accounts have been opened, representing $86 million in new deposits, with additional funding expected to flow into these new accounts over coming quarters. * As of early Q3, net loan growth is positive at ~$40 million despite elevated payoffs, with new loan production outpacing runoff. - Strategic Priorities * The company maintains a focus on growing core banking relationships and expanding its presence in existing markets before pursuing entry into entirely new geographies. * Renasant is leveraging market disruption from competing bank mergers and integration to capture new customers and deposits, positioning itself as a stable alternative for dissatisfied clients. * The firm maintains a disciplined underwriting approach, balancing competitive pressures with the need to preserve long-term profitability and credit quality.

Guidance

- Loan growth: Management reaffirms prior guidance of mid-single-digit full-year loan growth, and notes this target remains fully in range despite ongoing payoff headwinds.

Segment performance

Renasant is a full-service banking firm, so all performance is reported on a consolidated company basis rather than separated into distinct product segments. For Q2 2026: Loans increased $220.9 million quarter-over-quarter (4.7% annualized). Deposits decreased $398.4 million quarter-over-quarter (7.2% annualized), driven by seasonal public fund outflows. Reported net interest margin was 3.83% (down 4 bps quarter-over-quarter), while adjusted net interest margin held flat at 3.61%. Adjusted total cost of deposits increased 2 bps to 1.96%, and adjusted loan yields decreased 1 bp to 6.03%. Pre-provision net revenue was $112.4 million. Net interest income was $227.7 million (down $0.8 million quarter-over-quarter). Non-interest income was $51.2 million (up $0.9 million quarter-over-quarter). Non-interest expense was $161.5 million (up $6.2 million quarter-over-quarter). Credit loss provision was $3.8 million, net charge-offs were $2.8 million, and the allowance for credit losses as a percentage of total loans declined 2 bps to 1.54%. Adjusted earnings per share was 94 cents (up 36% year-over-year), adjusted return on average assets was 1.3% (up from 1.01% YoY), adjusted return on average tangible common equity was 16.25% (up from 13.5% YoY), and the efficiency ratio improved to 57.9% (down from 67.6% YoY). All regulatory capital ratios remain above well-capitalized minimum requirements.

Risks & headwinds

- Forward-looking statements are inherently uncertain, and actual results may differ materially from expectations due to a range of factors including changes in funding mix and costs, interest rate fluctuations, new regulatory changes, and unexpected shifts in loan portfolio performance, as detailed in prior SEC filings. * Elevated loan payoffs, concentrated in commercial real estate (multifamily and office assets), remain an ongoing headwind to net loan growth, though management expects payoff pressures to ease as 10-year Treasury yields have increased. * Persistent competitive pricing pressure on both loans and deposits continues, with competitors increasingly loosening non-price terms (guarantor requirements, loan-to-value, covenants) that creates pressure to match terms or lose market share. * Non-interest expense can be volatile due to unanticipated increases in self-insured health insurance claims and deferred compensation accruals tied to equity market valuations. * SBA fee income, which was strong in the first half of 2026, is expected to moderate in the second half, and mortgage banking revenue continues to be weak with no near-term improvement expected.

Analyst Q&A

• Q: What is your expectation for back-half loan growth, and how is production trending after a slight miss this quarter? /

  A: Management noted that while ongoing payoff headwinds will continue, loan production is ramping up, with the current loan pipeline up 6-10% from the start of Q2. The reaffirmed mid-single-digit full-year growth target remains fully in range. As of early Q3, net loans are up ~$40 million even with elevated payoffs, as production outpaces runoff. /

• Q: What are your core deposit trends after this quarter's seasonal public fund outflows, and what do you expect for deposit growth in the second half? /

  A: Seasonal public fund outflows will reverse in the second half, shifting from a headwind to a tailwind for deposit growth. Core deposit trends are very strong: Q2 saw 10,000+ new customer accounts with $380 million in new deposits, half in sticky checking accounts. New account activity has remained strong into early Q3, and management expects good overall deposit growth that hits the mid-single-digit full-year target. /

• Q: What is your outlook for net interest margin in the second half of 2026? /

  A: Management expects margin to remain broadly stable in the back half. Tailwinds that offset ongoing deposit pricing pressure include: recent end-of-quarter loan growth that will lift average balances in Q3, ~$1.25 billion in lower-yielding (4.95%) loans maturing over the next 12 months that will reprice higher, and $50-60 million per month in low-yielding (low 3%s) securities rolling off that are reinvested at close to 5%. /

• Q: Is the strong new deposit growth driven by market disruption from competing bank mergers in your footprint? /

  A: Yes, market disruption from recent bank merger activity is one of the main drivers of strong new deposit growth. Renasant's position as a stable, non-merging bank with consistent customer service is an advantage to attract customers unhappy with their current providers. Management does not expect this opportunity to abate soon. /

• Q: What is the expected impact of the Basel III proposal on your CET1 capital ratio, and what is your target CET1 range? /

  A: The proposal is expected to reduce risk-weighted assets by $1-1.3 billion, resulting in a 55-65 basis point positive impact to the CET1 ratio. This regulatory change does not alter Renasant's long-term target of maintaining CET1 in the low 11% range.