RENASANT CORP Q3 FY2024 earnings call

• Team praised for hard work and successful transactions. - Merger with The First: Shareholders approved, applications filed with regulators, expect closing in first half of 2025 and conversion in August. - Financial results: Adjusted earnings $43 million, net interest income up, non-interest income had a gain but adjusted non-interest income down, non-interest expense adjusted for merger expenses decreased. - Asset quality: Credit loss provision $1.2 million, net charge-offs $703,000, ACL at 1.59%. - Balance sheet: Total assets grew $450 million, loan growth affected by paydowns, core deposits grew.

Reported earnings for the third quarter were $72.5 million, or $1.18 per diluted share. Included were an after-tax gain on the sale of the insurance agency of $39 million and after-tax merger and conversion expenses of $9.5 million. Excluding these items, adjusted earnings were $43 million, or $0.70 per diluted share. Net interest income increased $6 million due to loan yields outpacing deposit costs. Reported non-interest income increased $50.5 million, but adjusted non-interest income decreased $2.8 million due to foregone insurance commissions. Non-interest expense was $122 million, with non-interest expense excluding merger expenses decreasing $2.2 million. Total assets grew $450 million, loan growth was affected by paydowns, and core deposits grew.

• Merger with The First expected to close in first half of 2025, conversion in August. - Near-term margin expected to have modest negative impact from rate cuts. - Paydowns potentially to increase in future quarters as rates change.

• Changes in mix and cost of funding sources, interest rate fluctuations. - Regulatory changes. - Portfolio performance issues. - Stress in senior housing and non-medical office loan asset classes.

Q: Catherine Mealor asked about margin outlook and deposit costs with rate cuts.

A: Jim Mabry said near-term rate cuts have modest negative impact on margin, deposit base has behaved well with flat non-interest-bearing deposits and deposit growth outpacing loan growth.

Q: Michael Rose asked about loan pipeline and paydowns.

A: Mitch Waycaster said pipeline was $176 million, production was $507 million, paydowns increased to $551 million due to various factors like sale of business and seasoned projects.

Q: Matt Olney asked about fixed asset repricing and margin compression.

A: Jim Mabry said ~$5.5 billion of variable rate loans yielding mid-7s, ~$750 million of fixed rate loans reprice in 12 months, and there would be modest margin contraction near-term.

Q: David Bishop asked about credit reserves.

A: David Meredith said CECL model drove reserve at 1.59% with repositioning in assets, and Kevin Chapman mentioned allowance built in 2020 for pandemic effects.

Q: Stephen Scouten asked about liquidity and loan deployment.

A: Jim Mabry said liquidity is high and hope to put it into loan book, and there are options like team lift-outs and small non-bank deals.