Renasant Corp (RNST) Reports Mixed Q4 Results Amid Securities Sale and Strategic Growth Efforts
Net Income: Q4 net income fell to $28.1 million from $46.3 million in Q4 of the previous year.
Earnings Per Share (EPS): Basic and diluted EPS for Q4 stood at $0.50, down from $0.83 and $0.82 respectively in the same quarter last year.
Adjusted Diluted EPS: Adjusted diluted EPS (Non-GAAP) increased to $0.76 from $0.74 in the previous quarter.
Net Interest Income: Slight decrease to $128.6 million in Q4, compared to the previous quarter.
Loan Growth: Loans saw a $183.2 million increase, indicating a 6.0% annualized net loan growth.
Noninterest Income: Decreased by $17.8 million on a linked quarter basis, primarily due to securities impairment charges.
Balance Sheet Strength: Book value per share and tangible book value per share (non-GAAP) both increased on a linked quarter basis.
On January 23, 2024, Renasant Corp (NYSE:RNST) released its 8-K filing, announcing its financial results for the fourth quarter of 2023. The company, which operates as a holding company for Renasant Bank and its subsidiary, Renasant Insurance, Inc., reported a decrease in net income to $28.1 million for the quarter, down from $46.3 million in the same period last year. Basic and diluted EPS were reported at $0.50, a decrease from the prior year's $0.83 and $0.82, respectively. However, adjusted diluted EPS (Non-GAAP) showed a slight increase to $0.76 from $0.74 in the previous quarter.
Financial Performance and Challenges
Renasant Corp's performance in the fourth quarter reflects a mix of achievements and challenges. The company's net interest income (fully tax equivalent) for the quarter was $128.6 million, a slight decrease of $1.5 million from the previous quarter. The net interest margin also saw a marginal decline. The cost of total deposits rose, indicating increased expenses for the company in maintaining its deposit base.
Noninterest income experienced a significant decrease, largely due to the company's decision to sell a portion of its available-for-sale securities portfolio, resulting in pre-tax non-credit related impairment charges of $19.4 million. This strategic move, however, generated $177 million in proceeds in the subsequent quarter. Additionally, the company faced increased noninterest expenses, including a special FDIC deposit insurance assessment of $2.7 million.
Balance Sheet and Credit Quality
On the balance sheet, Renasant Corp reported a healthy loan growth, with loans increasing by $183.2 million on a linked quarter basis. However, securities decreased by $10.0 million due to net cash outflows and impairment charges. Deposits saw a decrease of $80.3 million on a linked quarter basis, with a notable reduction in brokered deposits.
The company's credit quality remained solid, with a provision for credit losses of $2.5 million for the quarter. The ratio of allowance for credit losses on loans to total loans was 1.61% at the end of December 2023, and the coverage ratio improved slightly. Nonperforming loans to total loans decreased, indicating a stable credit environment.
Capital and Liquidity
Renasant Corp's capital and liquidity positions strengthened during the quarter. Book value per share and tangible book value per share (non-GAAP) both increased, reflecting the company's underlying financial strength. The company also highlighted its $100 million stock repurchase program, although no buyback activity occurred during the fourth quarter.
"The quarter exhibited solid results across the company. We continue to strengthen the balance sheet and remain committed to improving operating leverage," remarked C. Mitchell Waycaster, Chief Executive Officer of the Company. "Going into 2024, Renasant is well positioned to continue organic growth and pursue our strategic objectives."
In conclusion, Renasant Corp's fourth quarter results showcased a resilient banking operation amid a challenging environment. While net income and noninterest income faced headwinds, the company's adjusted EPS and balance sheet improvements reflect a strategic focus on long-term growth and operational efficiency. Investors and stakeholders will likely monitor how these strategic initiatives unfold in the coming year.
Explore the complete 8-K earnings release (here) from Renasant Corp for further details.
This article first appeared on GuruFocus.
