RENASANT CORP Q4 FY2024 earnings call

• 2024 was a successful year with focus on loan growth, disciplined pricing, and preparation for merger with The First. - Anticipate completing merger with The First in first half of 2025. - Net interest income increased due to loan growth and lower deposit costs. - Non-interest income decreased but adjusted non-interest income down due to seasonal mortgage volume. - Non-interest expense decreased, driven by lower merger and conversion expenses, though some operational and health expense outliers occurred. - Strong deposit growth, shifting away from non-core funding sources. - Asset quality metrics improved with criticized loans and non-performing assets decreasing.

Renasant's fourth quarter earnings were $44.7 million or $0.70 per diluted share. Net interest income was $135.5 million, an increase of $1.9 million linked quarter due to solid loan growth of $257 million and a significant decrease in deposit costs. Total deposits increased $63 million, with a $127 million reduction in brokered deposits. Non-interest income decreased $55.1 million, but adjusted non-interest income (excluding insurance agency gain) decreased $1.7 million quarter-over-quarter due to seasonal mortgage volume decline. Non-interest expense was $114.7 million, a $7 million quarter-over-quarter decrease driven by lower merger and conversion expenses. Total assets grew $76.1 million due to loan growth. Asset quality showed a credit loss provision of $3.1 million, net charge-offs of $1.7 million, and ACL as a percentage of total loans decreased to 1.57%, with criticized loans and non-performing assets decreasing.

• Anticipate completing merger with The First in first half of 2025. - NIM outlook shifted from modest compression to modest expansion due to better deposit pricing. - Optimistic about Q1 loan growth with strong pipeline across geographies and business lines. - Expect 2%-3% increase in expenses in 2025, with some volatility in Q1.

• Changes in mix and cost of funding sources. - Interest rate fluctuation. - Regulatory changes. - Portfolio performance issues. - Elevated operational losses, fraud, Reg E disputes, and health expenses.

Q: Reported 4Q NIM came in ahead of prior outlook, how to think about near-term NIM trends?

A: Funding base pricing behaved better than anticipated, costs came down more than expected, outlook for 2025 is modest margin expansion.

Q: Loan growth trends and new loan origination yields?

A: Strong loan growth, new and renewed loan yields around 7.35% in Q4, pipeline strong across geographies and business lines with optimistic outlook for Q1.

Q: Merger approval process and regulatory changes?

A: Merger application progressing, watching regulatory changes with potential net positive impact on industry and Renasant.

Q: Expense trends, one-time items?

A: Operational losses and health expenses elevated in Q4, but overall expense run rate expected to be 2%-3% increase in 2025.

Q: Loan repricing dynamics?

A: Variable rate book ~$6B, 90%+ reprice within month; fixed rate book ~$700M reprice in 12 months; securities ~$200M reprice mid-2s.

Q: Classified loans uptick?

A: Loans transitioning within criticized bucket, migrated to sub-standards, no new material stress.

Q: Balance sheet and liquidity?

A: Core deposit growth, leaning into liquidity, expect deposit engine to continue, net purchaser of securities in Q1.

Q: Deposit repricing?

A: ~$2B CDs mature in first half, blended rate low-4s.