Renasant Holds Earnings Steady as Expenses Pressure Returns
Quarterly expenses climbed $6.2 million to $161.5 million as compensation and health-insurance costs increased.
Renasant (RNST), the regional bank holding company, reported adjusted diluted earnings of $0.94 a share, up from $0.69 a year earlier, as a smaller credit-loss provision offset pressure from expenses and loan pricing.
Net income slipped to $87.1 million from $88.2 million sequentially, while diluted earnings held at $0.94 a share. Adjusted earnings edged up from $0.93 a share in the prior quarter. Adjusted pre-provision net revenue, which excluded the benefit of lower provisioning, declined to $112.4 million from $118.3 million.
Adjusted net interest income rose to $214.5 million from $213.3 million sequentially and $207.6 million a year earlier. The adjusted net interest margin held at 3.61% from the prior quarter and increased 3 basis points from a year earlier, even as adjusted loan yield fell to 6.03% from 6.18%.
Funding costs also turned higher from the first quarter. The cost of total deposits increased 2 basis points to 1.96%, while total funding cost rose to 2.08% from 2.05%. Both measures remained below their year-earlier levels. Deposits fell $398.4 million, largely because of $367.7 million in seasonal public-fund outflows, and noninterest-bearing deposits declined to 23.2% of the total.
Loans grew $220.9 million, or 4.7% on an annualized basis, with $58.3 million coming from an acquired Republic Business Credit portfolio. Commercial-and-industrial and construction lending drove the increase, while residential and commercial-real-estate balances declined.
Noninterest income rose $0.9 million sequentially to $51.2 million as fees and commissions, wealth-management revenue and bank-owned life-insurance income increased. Mortgage lock volume climbed $69.3 million to $611.6 million, though mortgage banking income fell to $9.2 million as the gain-on-sale margin narrowed 28 basis points to 1.57%.
Credit costs provided support, with the provision for credit losses declining to $3.8 million from $8.1 million in the prior quarter and $81.3 million a year earlier. Nonperforming loans fell to 0.97% of loans from 1.06% sequentially, while criticized loans declined to 2.66% from 2.77%; nonperforming loans remained above the 0.76% level recorded a year earlier.
Renasant repurchased $60.0 million of stock during the quarter and raised its dividend to $0.24 a share. The company also issued $300 million of subordinated notes, lifting its total risk-based capital ratio to 15.94% from 14.77% and adding capital as earnings faced a tighter spread between loan yields and funding costs.