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Renasant Corporation Announces Record Earnings For The Second Quarter Of 2018

TUPELO, Miss., July 17, 2018 /PRNewswire/ -- Renasant Corporation (RNST) (the "Company") today announced earnings results for the second quarter of 2018. Net income for the second quarter of 2018 was $36.7 million, as compared to $25.3 million for the second quarter of 2017. Basic and diluted earnings per share ("EPS") were $0.74 for the second quarter of 2018, as compared to basic and diluted EPS of $0.57 for the second quarter of 2017.

Renasant Corporation logo. (PRNewsFoto/Renasant Corporation) (PRNewsFoto/) (PRNewsfoto/Renasant Corporation)

Net income for the six months ending June 30, 2018, was $70.5 million, an increase of 43.20%, as compared to $49.3 million for the same time period in 2017. Basic and diluted EPS were $1.43 and $1.42, respectively, for the first six months of 2018, as compared to basic and diluted EPS of $1.11 for the same time period in 2017.

As announced on March 28, 2018, the Company and Brand Group Holdings, Inc. ("Brand"), the parent company of The Brand Banking Company, entered into a definitive merger agreement pursuant to which the Company will acquire Brand for a combination of cash and Renasant common stock. Brand operates 13 locations throughout the greater Atlanta market. As of March 31, 2018, Brand had approximately $2.4 billion in total assets, which included approximately $1.9 billion in total loans (excluding mortgage loans held for sale), and approximately $1.9 billion in total deposits. The Company has submitted all required regulatory applications and is currently waiting on approval of the transaction.

Impact of Certain Expenses and Charges

The Company incurred expenses and charges in connection with certain transactions with respect to which management is unable to accurately predict the timing of when these expenses or charges will be incurred or, when incurred, the amount of such expenses or charges. The following table presents the impact of these expenses and charges on reported earnings per share for the dates presented (in thousands):


Three months ended
June 30, 2018


Three months ended
June 30, 2017


Pre-tax

After-tax

Impact to
Diluted
EPS


Pre-tax

After-tax

Impact to
Diluted
EPS

Merger and conversion expenses

$

500


$

389


$

0.01



$

3,044


$

2,065


$

0.04































































Six months ended
June 30, 2018


Six months ended
June 30, 2017


Pre-tax

After-tax

Impact to
Diluted
EPS


Pre-tax

After-tax

Impact to
Diluted
EPS

Merger and conversion expenses

$

1,400


$

1,090


$

0.02



$

3,389


$

2,302


$

0.05


Debt prepayment penalty





205


139



 

"We are pleased with our results for the second quarter of 2018 as we once again achieved record earnings," said Renasant Executive Chairman, E. Robinson McGraw. "In addition, our strong profitability metrics continued to improve as our returns on average tangible assets and average tangible equity, excluding merger and conversion expenses, were 1.59% and 16.92%, respectively."

"Looking ahead, we anticipate a strong second half of 2018. We will continue to look for opportunities for profitable balance sheet growth, whether organic or through the result of  external opportunities, and we will continue to focus on expense management which will further improve our efficiency ratio," said C. Mitchell Waycaster, Renasant President and CEO. "We expect our merger with BrandBank to be completed during the third quarter of 2018, and we look forward to a smooth integration of our companies."

Profitability Metrics

The following table presents the Company's profitability metrics for the three and six months ending June 30, 2018, including and excluding the impact of after-tax merger and conversion expenses described above.


Three Months Ended


Six Months Ended


June 30, 2018


June 30, 2018


As Reported

Excluding merger
and conversion
expenses


As Reported

Excluding merger
and conversion
expenses

Return on average assets

1.43

%

1.44

%


1.40

%

1.42

%

Return on average tangible assets

1.57

%

1.59

%


1.54

%

1.57

%

Return on average equity

9.55

%

9.65

%


9.28

%

9.42

%

Return on average tangible equity

16.75

%

16.92

%


16.39

%

16.63

%

 

Return on average tangible assets and return on average tangible equity, as well as our tangible capital ratio (discussed under "Capital Ratios" below), are non-GAAP financial measures. A reconciliation of these financial measures from GAAP to non-GAAP is included in the table at the end of this release.

Other financial highlights from the second quarter of 2018 include the following:

  • Total assets were $10.5 billion at June 30, 2018, as compared to $9.8 billion at December 31, 2017.
  • Total loans increased to $7.8 billion at June 30, 2018, from $7.6 billion at December 31, 2017, which represents an annual linked quarter growth rate of approximately 4%.  Loans not purchased increased to $6.1 billion at June 30, 2018, from $5.6 billion at December 31, 2017. The following table presents reported taxable equivalent yield on loans for the periods presented (in thousands).

Three Months Ended


June 30,

March 31,

June 30,


2018

2018

2017

Taxable equivalent interest income on loans

$

97,045


$

93,373


$

78,857






Average loans

$

7,704,221


$

7,646,991


$

6,293,497






Loan yield

5.05

%

4.95

%

5.03

%

 

The impact from interest income collected on problem loans and purchase accounting adjustments on loans to total interest income on loans and yield is shown in the following table for the periods presented (in thousands).


Three Months Ended


June 30,

March 31,

June 30,


2018

2018

2017

Net interest income collected on problem loans

$

1,045


$

358


$

2,745


Accretable yield recognized on purchased loans(1)

5,719


6,118


5,410


Total impact to interest income on loans

$

6,764


$

6,476


$

8,155






Impact to loan yield

0.35

%

0.34

%

0.52

%








(1) Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $3,316, $3,358 and $2,684 for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017, respectively, which increased loan yield by 17 basis points, 18 basis points and 17 basis points for the same periods, respectively.

 

The following table presents reported taxable equivalent loan yield for the periods presented (in thousands).


Six Months Ended


June 30,


June 30,


2018


2017

Taxable equivalent interest income on loans

$

190,418



$

152,567






Average loans

$

7,675,764



$

6,246,363






Loan yield

5.00

%


4.93

%

 

The impact from interest income collected on problem loans and purchase accounting adjustments on loans to total interest income on loans and yield is shown in the following table for the periods presented (in thousands).


Six Months Ended


June 30,


June 30,


2018


2017

Net interest income collected on problem loans

$

1,403



$

3,302


Accretable yield recognized on purchased loans(1)

11,837



11,014


Total impact to interest income on loans

$

13,240



$

14,316






Impact to loan yield

0.35

%


0.46

%







(1) Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $6,674 and $5,416 for the six months ended June 30, 2018 and June 30, 2017, respectively, which increased loan yield by 18 basis points and 17 basis points for the same periods, respectively.

 

  • Total deposits increased to $8.4 billion at June 30, 2018, from $7.9 billion at December 31, 2017. Non-interest bearing deposits averaged $1.8 billion, or 22.31% of average deposits, for the first six months of 2018, compared to $1.6 billion, or 22.17% of average deposits, for the same period in 2017.  For the second quarter of 2018, the cost of total deposits was 52 basis points, as compared to 40 basis points for the first quarter of 2018 and 30 basis points in the second quarter of 2017. The cost of total deposits was 46 basis points for the first six months of 2018, as compared to 30 basis for the same time period in 2017. The following tables present the mix and cost of all funding sources for the three and six months ended June 30, 2018 and 2017 as well as for the three months ending March 31, 2018.

Percentage of Total Average Deposits and Borrowed Funds


Cost of Funds


Three Months Ending


Three Months Ending


June 30,


March 31,


June 30,


June 30,


March 31,


June 30,


2018


2018


2017


2018


2018


2017

Noninterest-bearing demand

21.48

%


21.52

%


21.79

%


%


%


%

Interest-bearing demand

46.63



46.31



45.63



0.54



0.35



0.23


Savings

6.82



6.88



7.70



0.15



0.11



0.07


Time deposits

21.54



21.56



21.72



1.12



1.00



0.83


Borrowed funds

3.53



3.73



3.16



4.27



3.98



4.57


Total deposits and borrowed funds

100.00

%


100.00

%


100.00

%


0.65

%


0.53

%


0.43

%

 


Percentage of Total Average
Deposits and Borrowed Funds


Cost of Funds


Six Months Ending


Six Months Ending


June 30,


June 30,


June 30,


June 30,


2018


2017


2018


2017

Noninterest-bearing demand

21.50

%


21.39

%


%


%

Interest-bearing demand

46.48



45.79



0.45



0.22


Savings

6.85



7.58



0.13



0.07


Time deposits

21.55



21.76



1.06



0.82


Borrowed funds

3.62



3.48



4.12



4.22


Total deposits and borrowed funds

100.00

%


100.00

%


0.60

%


0.43

%

 

  • Net interest income was $92.4 million for the second quarter of 2018, as compared to $89.2 million for the first quarter of 2018 and $79.6 million for the second quarter of 2017. The following table presents reported net interest margin for the periods presented (in thousands).

Three Months Ended


June 30,

March 31,

June 30,


2018

2018

2017

Taxable equivalent net interest income

$

93,806


$

90,807


$

81,453






Average earning assets

$

9,044,528


$

8,760,679


$

7,657,849






Net interest margin

4.16

%

4.20

%

4.27

%

 

The impact from interest income collected on problem loans and purchase accounting adjustments on net interest income and net interest margin is shown in the following table for the periods presented (in thousands).


Three Months Ended


June 30,

March 31,

June 30,


2018

2018

2017

Net interest income collected on problem loans

$

1,045


$

358


$

2,745


Accretable yield recognized on purchased loans(1)

5,719


6,118


5,410


Total impact to net interest income

$

6,764


$

6,476


$

8,155






Impact to net interest margin

0.30

%

0.30

%

0.43

%








(1) Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $3,316, $3,358 and $2,684 for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017, respectively, which increased net interest margin by 15 basis points, 16 basis points and 14 basis points for the same periods, respectively.

 

  • Net interest income was $181.6 million for the first six months of 2018, as compared to $153.6 million for the same period in 2017. The following table presents reported net interest margin for the periods presented (in thousands).

Six Months Ended


June 30,


June 30,


2018


2017

Taxable equivalent net interest income

$

184,613



$

157,360






Average earning assets

$

8,903,388



$

7,663,186






Net interest margin

4.18

%


4.14

%

 

The impact from interest income collected on problem loans and purchase accounting adjustments on net interest income and net interest margin is shown in the following table for the periods presented (in thousands).


Six Months Ended


June 30,


June 30,


2018


2017

Net interest income collected on problem loans

$

1,403



$

3,302


Accretable yield recognized on purchased loans(1)

11,837



11,014


Total impact to net interest income

$

13,240



$

14,316






Impact to net interest margin

0.30

%


0.38

%







(1) Includes additional interest income recognized in connection with the acceleration of paydowns and payoffs from purchased loans of $6,674 and $5,416 for the six months ended June 30, 2018 and June 30, 2017, respectively, which increased net interest margin by 15 basis points and 14 basis points for the same periods, respectively.

 

  • Noninterest income for the second quarter of 2018 was $35.6 million, as compared to $34.0 million for the first quarter of 2018 and $34.3 million for the second quarter of 2017. Noninterest income for the first six months of 2018 was $69.5 million, as compared to $66.3 million for the same period in 2017. The Company experienced increases in service charges on deposit accounts, fees and commissions on loans and deposits, and wealth management revenue in the first half of 2018 as compared to the same period in 2017. Mortgage banking income for the second quarter of 2018 was $12.8 million, compared to $11.0 million for the first quarter of 2018 and $12.4 million for the second quarter of 2017. Mortgage banking income for the first six months of 2018 was $23.8 million, as compared to $22.9 million for the same period in 2017.
  • Noninterest expense was $79.0 million for the second quarter of 2018, as compared to $77.9 million for the first quarter of 2018 and $74.8 million for the second quarter of 2017. Noninterest expense for the first six months of 2018 was $157.0 million, as compared to $144.2 million for the same period in 2017.

Asset Quality Metrics

Total nonperforming assets were $34.9 million at June 30, 2018, a decrease of $4.5 million from December 31, 2017, and consisted of $21.2 million in nonperforming loans (loans 90 days or more past due and nonaccrual loans) and $13.7 million in other real estate owned ("OREO").

The Company's nonperforming loans and OREO that were purchased in previous acquisitions (collectively referred to as "purchased nonperforming assets") were $10.1 million and $9.0 million, respectively, at June 30, 2018, as compared to $10.2 million and $11.5 million, respectively, at December 31, 2017. The purchased nonperforming assets were recorded at fair value at the time of acquisition, which significantly mitigates the Company's actual loss. As such, the remaining information in this release on nonperforming loans, OREO and the related asset quality ratios focuses on non-purchased nonperforming assets.

  • Excluding purchased loans, nonperforming loans decreased to $11.1 million, or 0.18% of total non-purchased loans, at June 30, 2018, from $13.3 million, or 0.24% of total non-purchased loans, at December 31, 2017. Early stage delinquencies, or loans 30-to-89 days past due, as a percentage of total loans were 0.19% at June 30, 2018, as compared to 0.30% at December 31, 2017.
  • Excluding purchased OREO, OREO was $4.7 million at June 30, 2018, as compared to $4.4 million at December 31, 2017. OREO sales totaled $1.2 million in the first half of 2018.
  • The allowance for loan losses was 0.61% of total loans at both June 30, 2018 and December 31, 2017. The allowance for loan losses was 0.78% of non-purchased loans at June 30, 2018, as compared to 0.83% at December 31, 2017.

Capital Ratios

  • At June 30, 2018, Tier 1 leverage capital ratio was 10.65%, Common Equity Tier 1 ratio was 11.71%, Tier 1 risk-based capital ratio was 12.73%, and total risk-based capital ratio was 14.75%. All regulatory ratios exceed the minimums required to be considered "well-capitalized."
  • Our ratio of shareholders' equity to assets was 14.78% at June 30, 2018, as compared to 15.41% at December 31, 2017. Tangible capital ratio was 9.35% at June 30, 2018, as compared to 9.56% at December 31, 2017.

CONFERENCE CALL INFORMATION:

A live audio webcast of a conference call with analysts will be available beginning at 10:00 AM Eastern Time on Wednesday, July 18, 2018.

The webcast can be accessed through Renasant's investor relations website at www.renasant.com or https://services.choruscall.com/links/rnst180718.html.  To access the conference via telephone, dial 1-877-513-1143 in the United States and request the Renasant Corporation Second Quarter Earnings Webcast and Conference Call. International participants should dial 1-412-902-4145 to access the conference call.

The webcast will be archived on www.renasant.com beginning one hour after the call and will remain accessible for one year. Replays can also be accessed via telephone by dialing 1-877-344-7529 in the United States and entering conference number 10122193 or by dialing 1-412-317-0088 internationally and entering the same conference number. Telephone replay access is available until August 1, 2018.

ABOUT RENASANT CORPORATION:

Renasant Corporation is the parent of Renasant Bank, a 114-year-old financial services institution. Renasant has assets of approximately $10.5 billion and operates more than 180 banking, mortgage, wealth management and insurance offices in Mississippi, Tennessee, Alabama, Florida and Georgia.

NOTE TO INVESTORS:

This press release may contain, or incorporate by reference, statements which may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward looking statements usually include words such as "expects," "projects," "anticipates," "believes," "intends," "estimates," "strategy," "plan," "potential," "possible," "approximately," "should" and variations of such words and other similar expressions.

Prospective investors are cautioned that any such forward-looking statements are not guarantees for future performance and involve risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include significant fluctuations in interest rates, inflation, economic recession, significant changes in the federal and state legal and regulatory environment, significant underperformance in the Company's portfolio of outstanding loans, and competition in the Company's markets. Management believes that the assumptions underlying the Company's forward-looking statements are reasonable, but any of the assumptions could prove to be inaccurate. Investors are urged to carefully consider the risks described in the Company's filings with the Securities and Exchange Commission (the "SEC") from time to time, including its most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are available at www.renasant.com and the SEC's website at www.sec.gov.  The Company expressly disclaims any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

NON-GAAP FINANCIAL MEASURES:

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains non-GAAP financial measures, namely, return on average tangible shareholders' equity, return on average tangible assets, the ratio of tangible equity to tangible assets (commonly referred to as the "tangible capital ratio") and the efficiency ratio. These non-GAAP financial measures adjust GAAP financial measures to exclude intangible assets and certain charges that the Company considers to be non-recurring in nature. Management uses these non-GAAP financial measures when evaluating capital utilization and adequacy. In addition, the Company believes that these non-GAAP financial measures facilitate the making of period-to-period comparisons and are meaningful indications of its operating performance, particularly because these measures are widely used by industry analysts for companies with merger and acquisition activities. Also, because intangible assets, such as goodwill and the core deposit intangible, and non-recurring charges can vary extensively from company to company and, as to intangible assets, are excluded from the calculation of a financial institution's regulatory capital, the Company believes that the presentation of this non-GAAP financial information allows readers to more easily compare the Company's results to information provided in other regulatory reports and the results of other companies. Reconciliations of these other non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the table at the end of this release under the caption "Reconciliation of GAAP to Non-GAAP."

None of the non-GAAP financial information that the Company has included in this release is intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Investors should note that, because there are no standardized definitions for the calculations as well as the results, the Company's calculations may not be comparable to similarly titled measures presented by other companies. Also, there may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

 

null

RENASANT CORPORATION























(Unaudited)























(Dollars in thousands, except per share data)








































Q2 2018 -


For The Six Months Ending





2018


2017


Q2 2017


June 30,






Second


First


Fourth


Third


Second


First


Percent






Percent



Quarter


Quarter


Quarter


Quarter


Quarter


Quarter


Variance


2018


2017


Variance

Statement of earnings





















Interest income - taxable equivalent basis


$

107,991



$

101,947



$

107,773



$

102,613



$

89,429



$

83,781



20.76



$

209,938



$

173,210



21.20


Interest income


$

106,574



$

100,380



$

104,587



$

100,695



$

87,579



$

81,889



21.69



$

206,954



$

169,468



22.12


Interest expense


14,185



11,140



11,325



10,678



7,976



7,874



77.85



25,325



15,850



59.78



Net interest income


92,389



89,240



93,262



90,017



79,603



74,015



16.06



181,629



153,618



18.23


Provision for loan losses


1,810



1,750



2,150



2,150



1,750



1,500



3.43



3,560



3,250



9.54



Net interest income after provision


90,579



87,490



91,112



87,867



77,853



72,515



16.35



178,069



150,368



18.42


Service charges on deposit accounts


8,271



8,473



8,659



8,676



7,958



7,931



3.93



16,744



15,889



5.38


Fees and commissions on loans and deposits


5,917



5,685



5,647



5,618



5,470



5,199



8.17



11,602



10,669



8.74


Insurance commissions and fees


2,110



2,005



1,955



2,365



2,181



1,860



(3.26)



4,115



4,041



1.83


Wealth management revenue


3,446



3,262



3,000



2,963



3,037



2,884



13.47



6,708



5,921



13.29


Securities gains (losses)






91



57














Mortgage banking income


12,839



10,960



9,871



10,616



12,424



10,504



3.34



23,799



22,928



3.80


Other


2,998



3,568



3,218



3,118



3,195



3,643



(6.17)



6,566



6,838



(3.98)



Total noninterest income


35,581



33,953



32,441



33,413



34,265



32,021



3.84



69,534



66,286



4.90


Salaries and employee benefits


52,010



48,784



48,787



48,530



45,014



42,209



15.54



100,794



87,223



15.56


Data processing


4,600



4,244



4,226



4,179



3,835



4,234



19.95



8,844



8,069



9.60


Occupancy and equipment


9,805



9,822



10,153



9,470



8,814



9,319



11.24



19,627



18,133



8.24


Other real estate


232



657



554



603



781



532



(70.29)



889



1,313



(32.29)


Amortization of intangibles


1,594



1,651



1,708



1,766



1,493



1,563



6.76



3,245



3,056



6.18


Merger and conversion related expenses


500



900



723



6,266



3,044



345



(83.57)



1,400



3,389



(58.69)


Debt extinguishment penalty












205







205



(100.00)


Other


10,285



11,886



10,657



9,846



11,860



10,902



(13.28)



22,171



22,762



(2.60)



Total noninterest expense


79,026



77,944



76,808



80,660



74,841



69,309



5.59



156,970



144,150



8.89


Income before income taxes


47,134



43,499



46,745



40,620



37,277



35,227



26.44



90,633



72,504



25.00


Income taxes


10,424



9,673



30,234



14,199



11,993



11,255



(13.08)



20,097



23,248



(13.55)



Net income


$

36,710



$

33,826



$

16,511



$

26,421



$

25,284



$

23,972



45.19



$

70,536



$

49,256



43.20


Basic earnings per share


$

0.74



$

0.69



$

0.33



$

0.54



$

0.57



$

0.54



29.82



$

1.43



$

1.11



28.83


Diluted earnings per share


0.74



0.68



0.33



0.53



0.57



0.54



29.82



1.42



1.11



27.93


Average basic shares outstanding


49,413,754



49,356,417



49,320,377



49,316,572



44,415,423



44,364,337



11.25



49,385,244



44,390,021



11.25


Average diluted shares outstanding


49,549,761



49,502,950



49,456,289



49,435,225



44,523,541



44,480,499



11.29



49,522,045



44,500,280



11.28


Common shares outstanding


49,424,339



49,392,978



49,321,231



49,320,225



44,430,335



44,394,707



11.24



49,424,339



44,430,335



11.24


Cash dividend per common share


$

0.20



$

0.19



$

0.19



$

0.18



$

0.18



$

0.18



11.11



$

0.39



$

0.36



8.33


Performance ratios





















Return on avg shareholders' equity


9.55

%


9.00

%


4.31

%


7.01

%


8.06

%


7.80

%




9.28

%


7.93

%



Return on avg tangible s/h's equity (1)


16.75

%


16.02

%


7.94

%


12.74

%


13.76

%


13.48

%




16.39

%


13.62

%



Return on avg assets