Renasant (RNST) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $38.9 million, or $0.69 per diluted share, up from $28.6 million in Q2 2023; net interest margin rose to 3.31% sequentially.

• Loans grew by $104.2 million (3.4% annualized), and deposits increased by $18.1 million; core deposits rose $201.8 million excluding brokered deposits.

• Renasant completed the sale of its insurance subsidiary for $56.4 million, with an estimated after-tax gain of $36.4 million to be recognized in Q3 2024.

• Announced a merger agreement with The First Bancshares, Inc., expected to close in H1 2025, and completed a $217 million equity raise to support growth.

• Management remains optimistic about future growth, focusing on relationship banking and expansion in Southeastern markets.

Financial highlights

• Total assets at June 30, 2024, were $17.5 billion; loans $12.6 billion; deposits $14.3 billion; equity $2.35 billion.

• Net interest income (FTE) for Q2 2024 was $127.6 million; adjusted net interest margin was 3.31%, up 1 basis point from Q1.

• Noninterest income increased to $38.8 million in Q2 2024, reflecting the absence of prior-year securities losses and higher mortgage volumes.

• Noninterest expense was $112.0 million in Q2 2024, with an efficiency ratio of 67.3%; salaries and benefits comprised 63% of expenses.

• Provision for credit losses was $4.3 million in Q2 2024; allowance for credit losses stood at $199.9 million, or 1.59% of total loans.

Outlook and guidance

• The merger with The First Bancshares is expected to close in the first half of 2025, subject to regulatory and shareholder approvals.

• Net interest margin expected to remain roughly flat for the balance of the year in a flat rate environment; modest negative impact to EPS if rate cuts occur.

• Expense base to decrease by about $2 million per quarter due to insurance sale; continued focus on expense management and profitability.

• Allowance for credit losses anticipated to slowly drift down, potentially toward 1.50% by year-end if current conditions persist.

• Proceeds from the recent equity offering will be used for general corporate purposes, including supporting growth and future acquisitions.