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Renasant Corporation Announces Earnings for the Second Quarter of 2022

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Renasant Corporation
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  • RNST
Renasant Corporation
Renasant Corporation

TUPELO, Miss., July 26, 2022 (GLOBE NEWSWIRE) -- Renasant Corporation (NASDAQ: RNST) (the “Company”) today announced earnings results for the second quarter of 2022. Net income for the second quarter of 2022 was $39.7 million, as compared to $40.9 million for the second quarter of 2021. Basic and diluted earnings per share (“EPS”) were $0.71 for the second quarter of 2022, as compared to basic and diluted EPS of $0.73 and $0.72, respectively, for the second quarter of 2021.

"Our results for the second quarter reflect improved profitability on a linked quarter basis. Earnings benefited from expansion in the net interest margin, effective expense management, contributions from our wealth management and insurance lines of business and solid loan growth," remarked C. Mitchell Waycaster, Renasant President and Chief Executive Officer. "The balance sheet continues to reflect good liquidity, core funding, asset quality and capital levels."

Quarterly Highlights

Earnings

  • Net income for the second quarter of 2022 was $39.7 million with diluted EPS of $0.71

  • Net interest income (fully tax equivalent) for the second quarter of 2022 was $115.3 million, up $13.9 million on a linked quarter basis

  • For the second quarter of 2022, net interest margin was 3.11%, up 35 basis points on a linked quarter basis

  • Cost of total deposits was 15 basis points for the second quarter of 2022, down 2 basis points on a linked quarter basis

  • Our wealth management and insurance lines of business produced strong results during the second quarter of 2022

  • Our mortgage division generated $0.9 billion in interest rate lock volume during the second quarter of 2022, compared to $1.2 billion during the first quarter of 2022. Gain on sale margin was 1.27% for the second quarter of 2022, down 54 basis points on a linked quarter basis

  • Second quarter noninterest expense increased by $4.1 million on a linked quarter basis, primarily driven by an increase in salaries and benefits, as annual merit increases and an increase to our minimum wage took effect during the quarter, and a one-time restructuring charge of $1.2 million resulting from the early termination of a lease agreement

Balance Sheet

  • Loans increased $290.3 million, or 11.3% annualized, during the second quarter of 2022 from the balance at March 31, 2022

  • The securities portfolio increased $124.6 million during the second quarter of 2022, comprised of net additions to the portfolio during the quarter of $201.0 million and a negative fair market value adjustment in our available-for-sale portfolio of $76.4 million

  • Deposits at June 30, 2022 decreased $227.0 million from March 31, 2022, primarily driven by a decrease in interest bearing deposits. Noninterest bearing deposits increased $35.1 million from March 31, 2022 and represented 34.45% of total deposits at June 30, 2022

Capital

  • Book value per share and tangible book value per share (non-GAAP)(1) decreased 1.0% and 1.7%, respectively, on a linked quarter basis, driven by a decrease in accumulated other comprehensive income, which lowered tangible book value per share by $0.91

  • The Company has a $50 million stock repurchase program that will remain in effect through October 2022; there was no buyback activity during the second quarter of 2022

Credit Quality

  • The Company recorded a provision for credit losses on loans of $2.0 million and a provision for unfunded commitments (recorded in other noninterest expense) of $450 thousand for the second quarter of 2022

  • The allowance for credit losses on loans to total loans decreased on a linked quarter basis to 1.57% at June 30, 2022 as compared to 1.61% at March 31, 2022

  • The coverage ratio, or the allowance for credit losses on loans to nonperforming loans, was 373.21% at June 30, 2022, compared to 318.65% at March 31, 2022

  • Net loan charge-offs for the second quarter of 2022 were $2.3 million, or 0.09% of average loans on an annualized basis

  • Credit metrics remained relatively stable on a linked quarter basis. Nonperforming loans to total loans decreased to 0.42% at June 30, 2022 compared to 0.51% at March 31, 2022 and criticized loans (which include classified and special mention loans) to total loans increased to 2.57% at June 30, 2022, compared to 2.47% at March 31, 2022

(1)A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.

Income Statement

(Dollars in thousands, except per share data)

Three Months Ended

 

Six Months Ended

 

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

 

Jun 30, 2022

Jun 30, 2021

Interest income

 

 

 

 

 

 

 

 

Loans held for investment

$

106,409

 

$

95,829

 

$

98,478

 

$

102,627

 

$

109,721

 

 

$

202,238

 

$

221,727

 

Loans held for sale

 

2,586

 

 

2,863

 

 

3,652

 

 

2,377

 

 

3,604

 

 

 

5,449

 

 

6,603

 

Securities

 

12,471

 

 

10,835

 

 

9,221

 

 

8,416

 

 

7,321

 

 

 

23,306

 

 

13,895

 

Other

 

1,954

 

 

664

 

 

568

 

 

593

 

 

345

 

 

 

2,618

 

 

528

 

Total interest income

 

123,420

 

 

110,191

 

 

111,919

 

 

114,013

 

 

120,991

 

 

 

233,611

 

 

242,753

 

Interest expense

 

 

 

 

 

 

 

 

Deposits

 

5,018

 

 

5,637

 

 

6,056

 

 

6,972

 

 

7,669

 

 

 

10,655

 

 

15,948

 

Borrowings

 

4,887

 

 

4,925

 

 

4,381

 

 

3,749

 

 

3,743

 

 

 

9,812

 

 

7,578

 

Total interest expense

 

9,905

 

 

10,562

 

 

10,437

 

 

10,721

 

 

11,412

 

 

 

20,467

 

 

23,526

 

Net interest income

 

113,515

 

 

99,629

 

 

101,482

 

 

103,292

 

 

109,579

 

 

 

213,144

 

 

219,227

 

Provision for (recovery of) credit losses

 

 

 

 

 

 

 

 

Provision for (recovery of) loan losses

 

2,000

 

 

1,500

 

 

(500

)

 

(1,200

)

 

—

 

 

 

3,500

 

 

—

 

Provision for credit losses on HTM securities

 

—

 

 

—

 

 

32

 

 

—

 

 

—

 

 

 

—

 

 

—

 

Total provision for (recovery of) credit losses

 

2,000

 

 

1,500

 

 

(468

)

 

(1,200

)

 

—

 

 

 

3,500

 

 

—

 

Net interest income after provision for (recovery of) credit losses

 

111,515

 

 

98,129

 

 

101,950

 

 

104,492

 

 

109,579

 

 

 

209,644

 

 

219,227

 

Noninterest income

 

37,214

 

 

37,458

 

 

47,582

 

 

50,755

 

 

47,610

 

 

 

74,672

 

 

128,647

 

Noninterest expense

 

98,194

 

 

94,105

 

 

101,115

 

 

103,999

 

 

108,777

 

 

 

192,299

 

 

224,712

 

Income before income taxes

 

50,535

 

 

41,482

 

 

48,417

 

 

51,248

 

 

48,412

 

 

 

92,017

 

 

123,162

 

Income taxes

 

10,857

 

 

7,935

 

 

11,363

 

 

11,185

 

 

7,545

 

 

 

18,792

 

 

24,387

 

Net income

$

39,678

 

$

33,547

 

$

37,054

 

$

40,063

 

$

40,867

 

 

$

73,225

 

$

98,775

 

 

 

 

 

 

 

 

 

 

Adjusted net income (non-GAAP)(1)

$

40,601

 

$

33,728

 

$

38,232

 

$

40,315

 

$

41,169

 

 

$

74,329

 

$

89,363

 

Adjusted pre-provision net revenue (“PPNR”) (non-GAAP)(1)

$

54,172

 

$

42,664

 

$

49,190

 

$

50,171

 

$

48,797

 

 

$

96,836

 

$

111,063

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.71

 

$

0.60

 

$

0.66

 

$

0.71

 

$

0.73

 

 

$

1.31

 

$

1.75

 

Diluted earnings per share

 

0.71

 

 

0.60

 

 

0.66

 

 

0.71

 

 

0.72

 

 

 

1.30

 

 

1.75

 

Adjusted diluted earnings per share (non-GAAP)(1)

 

0.72

 

 

0.60

 

 

0.68

 

 

0.71

 

 

0.73

 

 

 

1.32

 

 

1.58

 

Average basic shares outstanding

 

55,906,755

 

 

55,809,192

 

 

55,751,487

 

 

56,146,285

 

 

56,325,717

 

 

 

55,858,243

 

 

56,283,195

 

Average diluted shares outstanding

 

56,182,845

 

 

56,081,863

 

 

56,105,050

 

 

56,447,184

 

 

56,635,898

 

 

 

56,130,762

 

 

56,578,580

 

Cash dividends per common share

$

0.22

 

$

0.22

 

$

0.22

 

$

0.22

 

$

0.22

 

 

$

0.44

 

$

0.44

 

(1)A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.

Performance Ratios

 

Three Months Ended

 

Six Months Ended

 

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

 

Jun 30, 2022

Jun 30, 2021

Return on average assets

0.96

%

0.81

%

0.89

%

0.99

%

1.04

%

 

0.89

%

1.28

%

Adjusted return on average assets (non-GAAP)(1)

0.98

 

0.82

 

0.92

 

0.99

 

1.04

 

 

0.90

 

1.16

 

Return on average tangible assets (non-GAAP)(1)

1.04

 

0.89

 

0.98

 

1.08

 

1.14

 

 

0.97

 

1.40

 

Adjusted return on average tangible assets (non-GAAP)(1)

1.07

 

0.90

 

1.01

 

1.09

 

1.14

 

 

0.98

 

1.27

 

Return on average equity

7.31

 

6.05

 

6.59

 

7.16

 

7.40

 

 

6.67

 

9.08

 

Adjusted return on average equity (non-GAAP)(1)

7.48

 

6.08

 

6.80

 

7.21

 

7.46

 

 

6.77

 

8.22

 

Return on average tangible equity (non-GAAP)(1)

13.50

 

10.93

 

11.94

 

13.05

 

13.54

 

 

12.18

 

16.66

 

Adjusted return on average tangible equity (non-GAAP)(1)

13.81

 

10.99

 

12.31

 

13.13

 

13.64

 

 

12.36

 

15.11

 

Efficiency ratio (fully taxable equivalent)

64.37

 

67.78

 

67.04

 

66.77

 

68.49

 

 

66.00

 

64.00

 

Adjusted efficiency ratio (non-GAAP)(1)

62.44

 

67.02

 

64.18

 

66.06

 

67.28

 

 

64.63

 

65.47

 

Dividend payout ratio

30.99

 

36.67

 

33.33

 

30.99

 

30.14

 

 

33.59

 

25.14

 

Capital and Balance Sheet Ratios

 

As of

 

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

Shares outstanding

 

55,932,017

 

 

55,880,666

 

 

55,756,233

 

 

55,747,407

 

 

56,350,878

 

Market value per share

$

28.81

 

$

33.45

 

$

37.95

 

$

36.05

 

$

40.00

 

Book value per share

 

37.85

 

 

38.25

 

 

39.63

 

 

39.53

 

 

39.11

 

Tangible book value per share (non-GAAP)(1)

 

20.55

 

 

20.91

 

 

22.35

 

 

22.22

 

 

21.95

 

Shareholders' equity to assets

 

12.74

%

 

12.68

%

 

13.15

%

 

13.64

%

 

13.75

%

Tangible common equity ratio (non-GAAP)(1)

 

7.34

 

 

7.35

 

 

7.86

 

 

8.15

 

 

8.22

 

Leverage ratio

 

9.16

 

 

9.00

 

 

9.15

 

 

9.18

 

 

9.30

 

Common equity tier 1 capital ratio

 

10.74

 

 

10.78

 

 

11.18

 

 

11.02

 

 

11.14

 

Tier 1 risk-based capital ratio

 

11.60

 

 

11.67

 

 

12.10

 

 

11.94

 

 

12.07

 

Total risk-based capital ratio

 

15.34

 

 

15.51

 

 

16.14

 

 

14.66

 

 

15.11

 

(1)A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.

Noninterest Income and Noninterest Expense

(Dollars in thousands)

Three Months Ended

 

Six Months Ended

 

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

 

Jun 30, 2022

Jun 30, 2021

Noninterest income

 

 

 

 

 

 

 

 

Service charges on deposit accounts

$

9,734

 

$

9,562

 

$

9,751

 

$

9,337

 

$

9,458

 

 

$

19,296

 

$

17,481

 

Fees and commissions

 

4,668

 

 

3,982

 

 

3,885

 

 

3,837

 

 

4,110

 

 

 

8,650

 

 

8,010

 

Insurance commissions

 

2,591

 

 

2,554

 

 

2,353

 

 

2,829

 

 

2,422

 

 

 

5,145

 

 

4,659

 

Wealth management revenue

 

5,711

 

 

5,924

 

 

5,273

 

 

5,371

 

 

5,019

 

 

 

11,635

 

 

9,811

 

Mortgage banking income

 

8,316

 

 

9,633

 

 

14,726

 

 

23,292

 

 

20,853

 

 

 

17,949

 

 

71,586

 

Swap termination gains

 

—

 

 

—

 

 

4,676

 

 

—

 

 

—

 

 

 

—

 

 

—

 

Net gains on sales of securities

 

—

 

 

—

 

 

49

 

 

764

 

 

—

 

 

 

—

 

 

1,357

 

BOLI income

 

2,331

 

 

2,153

 

 

2,048

 

 

1,602

 

 

1,644

 

 

 

4,484

 

 

3,716

 

Other

 

3,863

 

 

3,650

 

 

4,821

 

 

3,723

 

 

4,104

 

 

 

7,513

 

 

12,027

 

Total noninterest income

$

37,214

 

$

37,458

 

$

47,582

 

$

50,755

 

$

47,610

 

 

$

74,672

 

$

128,647

 

Noninterest expense

 

 

 

 

 

 

 

 

Salaries and employee benefits

$

65,580

 

$

62,239

 

$

62,523

 

$

69,115

 

$

70,293

 

 

$

127,819

 

$

148,989

 

Data processing

 

3,590

 

 

4,263

 

 

5,346

 

 

5,277

 

 

5,652

 

 

 

7,853

 

 

11,103

 

Net occupancy and equipment

 

11,155

 

 

11,276

 

 

11,177

 

 

11,748

 

 

11,374

 

 

 

22,431

 

 

23,912

 

Other real estate owned

 

(187

)

 

(241

)

 

(60

)

 

168

 

 

104

 

 

 

(428

)

 

145

 

Professional fees

 

2,778

 

 

3,151

 

 

3,209

 

 

2,972

 

 

2,674

 

 

 

5,929

 

 

5,595

 

Advertising and public relations

 

3,406

 

 

4,059

 

 

2,929

 

 

2,922

 

 

3,100

 

 

 

7,465

 

 

6,352

 

Intangible amortization

 

1,310

 

 

1,366

 

 

1,424

 

 

1,481

 

 

1,539

 

 

 

2,676

 

 

3,137

 

Communications

 

1,904

 

 

2,027

 

 

2,088

 

 

2,198

 

 

2,291

 

 

 

3,931

 

 

4,583

 

Merger and conversion related expenses

 

—

 

 

687

 

 

—

 

 

—

 

 

—

 

 

 

687

 

 

—

 

Restructuring charges (benefit)

 

1,187

 

 

(455

)

 

61

 

 

—

 

 

15

 

 

 

732

 

 

307

 

Debt prepayment penalty

 

—

 

 

—

 

 

6,123

 

 

—

 

 

—

 

 

 

—

 

 

—

 

Other

 

7,471

 

 

5,733

 

 

6,295

 

 

8,118

 

 

11,735

 

 

 

13,204

 

 

20,589

 

Total noninterest expense

$

98,194

 

$

94,105

 

$

101,115

 

$

103,999

 

$

108,777

 

 

$

192,299

 

$

224,712

 

Mortgage Banking Income

(Dollars in thousands)

Three Months Ended

 

Six Months Ended

 

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

 

Jun 30, 2022

Jun 30, 2021

Gain on sales of loans, net

$

3,490

 

$

6,047

 

$

10,801

 

$

20,116

 

$

17,581

 

 

$

9,537

 

$

51,482

 

Fees, net

 

3,064

 

 

3,053

 

 

4,320

 

 

3,420

 

 

4,519

 

 

 

6,117

 

 

9,421

 

Mortgage servicing income (loss), net

 

1,762

 

 

533

 

 

(395

)

 

(244

)

 

(1,247

)

 

 

2,295

 

 

(2,878

)

MSR valuation adjustment

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

 

—

 

 

13,561

 

Total mortgage banking income

$

8,316

 

$

9,633

 

$

14,726

 

$

23,292

 

$

20,853

 

 

$

17,949

 

$

71,586

 

Balance Sheet

(Dollars in thousands)

As of

 

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

Assets

 

 

 

 

 

Cash and cash equivalents

$

1,010,468

 

$

1,607,493

 

$

1,877,965

 

$

1,476,141

 

$

1,605,488

 

Securities held to maturity, at amortized cost

 

488,851

 

 

487,194

 

 

416,357

 

 

—

 

 

—

 

Securities available for sale, at fair value

 

2,528,253

 

 

2,405,316

 

 

2,386,052

 

 

2,544,643

 

 

2,163,820

 

Loans held for sale, at fair value

 

196,598

 

 

280,464

 

 

453,533

 

 

452,869

 

 

448,959

 

Loans:

 

 

 

 

 

Non purchased

 

9,692,116

 

 

9,338,890

 

 

9,011,011

 

 

8,875,880

 

 

8,892,544

 

Purchased

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    Berkshire Hathaway Inc said on Saturday that Vice Chairman Greg Abel, who is next in line to succeed billionaire Warren Buffett as chief executive, sold his 1% stake in the company's Berkshire Hathaway Energy unit for $870 million. In its quarterly report, Berkshire said the energy unit bought out Abel in June under an agreement among them and the family of the late billionaire philanthropist Walter Scott, which owns an 8% stake. Buffett's Omaha, Nebraska-based conglomerate took a $362 million charge to capital, reflecting the premium over how much the stake's value was reflected on its books.

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    (Reuters) -The slide in U.S. stock prices punished Berkshire Hathaway Inc's bottom line in the second quarter, as the conglomerate run by billionaire Warren Buffett on Saturday reported a $43.8 billion loss. Berkshire nevertheless generated nearly $9.3 billion of operating profit, as gains from reinsurance and the BNSF railroad offset fresh losses at the Geico car insurer, where parts shortages and higher used vehicle prices boosted accident claims. Despite the huge net loss, "the results show Berkshire's resilience," said James Shanahan, an Edward Jones & Co analyst who rates Berkshire "neutral."

  • Ford Stock Can Keep Rising After Solid July Sales

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  • Dow Jones Futures: Market Rally Resilient; Apple, Tesla, These 5 Chip Stocks Could Use This

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  • 3 Disruptive Growth Stocks That Can Turn $250,000 Into $1 Million by 2030

    Since touching their respective closing highs between mid-November and the first week of January, the iconic Dow Jones Industrial Average, widely tracked S&P 500, and growth-dependent Nasdaq Composite have plunged as much as 19%, 24%, and 34%. While the Dow came within a bad day of ending in bear market territory, the S&P 500 and Nasdaq were firmly entrenched there. If there's a silver lining to the worst first-half to a year for the S&P 500 since 1970, it's that bargains abound for patient investors.

  • Wall St Week Ahead: Inflation data may seal fate of unloved U.S. stock rally

    NEW YORK (Reuters) -A rally in U.S. stocks that has powered on despite skepticism from Wall St faces a reality check in the coming week, as key inflation data threatens to shut the door on expectations of a dovish shift from the Federal Reserve. The S&P 500 has walked a tightrope this summer, rising 13% from its mid-June lows on hopes that the Fed will end its market-bruising rate increases sooner than anticipated. A blowout U.S. jobs number on Friday bolstered the case for more Fed hikes but barely dented stocks – the S&P fell less than 0.2% on the day and eked out its third straight week of gains.

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  • Should You Really Follow Warren Buffett's Lead on Apple Stock?

    It's hard to argue with the idea Warren Buffett is the greatest living investor. There's a reason he's called the Oracle of Omaha, and it's why many investors follow his every stock move, but often Buffett's investing advice is more one of "do as I say, not as I do." While Berkshire Hathaway does own dozens of companies because of the vast sums of money he invests, Buffett has put most of his eggs into one basket: Apple (NASDAQ: AAPL).

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    Once the mightiest of industrial conglomerates, GE is breaking into three pieces. It's time to value each of the businesses.