Key Highlights

  • Diluted EPS was $0.86 on both a GAAP and adjusted basis, versus $0.94 in the second quarter and $0.63 GAAP a year earlier.
  • Net income was $78.9 million, compared with $87.1 million in the second quarter.
  • Loans held for investment rose $555.9 million to $19.75 billion, about 11.5% annualized growth.
  • Net interest margin on a tax-equivalent basis was 3.77%, down 6 basis points.
  • The board approved a new $175.0 million share repurchase program on October 27.

Renasant Earnings: Did Loan Growth Outweigh the Step Down in EPS?

Renasant (NASDAQ:RNST) reported third-quarter results on Tuesday, October 27, with diluted EPS of $0.86 on both a GAAP and adjusted basis, down from $0.94 in the second quarter. Against the year-ago quarter, GAAP EPS rose from $0.63 and adjusted EPS from $0.77. The screened estimate was $0.94 (as screened).

Net income was $78.9 million versus $87.1 million in the second quarter and $59.8 million a year earlier. Nine-month diluted EPS was $2.74 versus $1.20.

Record loan production was offset by a higher provision and a slightly lower margin.

Net Interest Margin and Fees: What Held Revenue Roughly Steady?

Net interest income was $223.7 million on a GAAP basis and $228.6 million tax-equivalent, up $0.9 million from the second quarter. The tax-equivalent net interest margin was 3.77%, down 6 basis points, and the adjusted margin was 3.58%, down 3 basis points.

Noninterest income was $49.3 million, down $1.9 million, mainly from mortgage rate effects, and mortgage banking income was $7.3 million. Noninterest expense fell $1.2 million to $160.3 million. The efficiency ratio was 57.70% on a GAAP basis and 54.70% adjusted.

Credit Quality: Does a 0.20% Charge-Off Rate Change the Reserve Picture?

Provision for loan losses was $10.1 million versus $1.2 million in the second quarter, and the total provision for credit losses was $13.3 million. Net charge-offs were $10.0 million, or 0.20% annualized, with about 16 basis points tied to a single credit.

The allowance for credit losses was 1.50% of loans, down 4 basis points. Nonperforming loans fell to 0.89% of loans from 0.97%, and nonperforming assets were $191.1 million, or 0.69% of assets. Criticized loans eased to 2.50% of loans from 2.66%.

Funding and Capital: How Did Deposit Outflows Shape the Balance Sheet?

Loans held for investment reached $19.75 billion, up $555.9 million, about 11.5% annualized. Deposits slipped $73.2 million to $21.63 billion on $214.7 million of public fund outflows, and short-term borrowings rose $491.3 million.

Common equity tier 1 and tier 1 capital were 10.92%, total risk-based capital was 15.52%, and the leverage ratio was 9.54%. Tangible book value per share was $25.29, down 0.2%, and book value per share was $42.41. Return on average tangible equity was 14.51%.

The company repurchased $42.6 million of stock in the quarter at a weighted average of $41.05. The board approved a new $175.0 million program on October 27, running to the earlier of October 2027 or full use, and kept a $0.24 quarterly dividend, up from $0.22 a year ago, a 27.59% payout ratio.

What to Watch Next: Can Hiring and Buybacks Sustain Growth as the Margin Eases?

Management credited record loan production, core deposit growth, a stable core margin, expense discipline and lower criticized loans. It said it expects to build on year-to-date results by growing relationships and adding bankers across its footprint. The release gave no numeric guidance, so the next checkpoints are the pace of deposit funding, the margin trend and the use of the new repurchase authorization.