Renasant Corporation Announces 2014 First Quarter Earnings

TUPELO, Miss., April 22, 2014 /PRNewswire/ -- Renasant Corporation (NASDAQ: RNST) (the "Company") today announced its financial results for the first quarter of 2014. Net income for the first quarter of 2014 was $13,597,000, or basic and diluted earnings per share ("EPS") of $0.43, as compared to $7,571,000, or basic and diluted EPS of $0.30, for the first quarter of 2013.  The Company's balance sheet and results of operations as of and for the three months ending March 31, 2014, include the impact of the Company's acquisition of First M&F Corporation ("First M&F"), which was completed on September 1, 2013.  Periods presented prior to September 1, 2013, do not reflect any impact from the First M&F acquisition.

For the first quarter of 2014, the Company's return on average assets and return on average equity were 0.93% and 8.19%, respectively, as compared to 0.73% and 6.12%, respectively, for the first quarter of 2013.  The Company's 2014 first quarter return on average tangible assets and return on average tangible equity were 1.05% and 16.05%, respectively, as compared to 0.79% and 10.19%, respectively, for the first quarter of 2013.

"Our first quarter results represent a strong beginning to 2014 as net income and EPS increased 80% and 43%, respectively, as compared to the same quarter last year," said Renasant Chairman and Chief Executive Officer, E. Robinson McGraw. "With the operations of First M&F fully integrated, we believe we have made a strong start toward achieving our key performance goals and increasing profitability throughout 2014."

Total assets as of March 31, 2014, were approximately $5.90 billion, as compared to $4.27 billion as of March 31, 2013, and $5.7 billion on a linked quarter basis. The increase in assets at March 31, 2014, as compared to the same period in 2013 is due primarily to the First M&F acquisition. The increase in assets on a linked quarter basis is due to a seasonal influx of deposits, primarily in public fund deposits. Due to the short-term nature of these deposit influxes, the funds from these deposits remained in liquid assets (low-yielding interest bearing cash or short-term investments). The excess cash and short-term investments negatively impacted net interest margin by 15 basis points, leverage ratio by 16 basis points, tangible capital ratio by 12 basis points and return on average assets by 3 basis points.

Total deposits, including deposits acquired in the First M&F acquisition, were $5.0 billion at March 31, 2014, as compared to $3.56 billion at March 31, 2013, and $4.84 billion at December 31, 2013. The Company's noninterest-bearing deposits averaged approximately $949 million, or 18.9% of average deposits, for the first quarter of 2014, as compared to $550 million, or 15.7% of average deposits, for the first quarter of 2013. The Company's cost of funds was 48 basis points for the first quarter of 2014, as compared to 62 basis points for the same quarter in 2013. 

Total loans, including loans acquired in either the First M&F merger or in FDIC-assisted transactions (collectively referred to as "acquired loans"), were approximately $3.87 billion at March 31, 2014, as compared to $2.81 billion at March 31, 2013. Excluding acquired loans, loans grew 13.6% to $2.95 billion at March 31, 2014, as compared to $2.59 billion at March 31, 2013. 

At March 31, 2014, the Company's Tier 1 leverage capital ratio was 8.56%, its Tier 1 risk-based capital ratio was 11.55% and its total risk-based capital ratio was 12.72%. In all capital ratio categories, the Company's regulatory capital ratios continued to be in excess of the regulatory minimums required to be classified as "well-capitalized." The Company's tangible common equity ratio was 6.68% as of March 31, 2014.

Net interest income was $50.0 million for the first quarter of 2014, as compared to $33.4 million for the first quarter of 2013, and $50.7 million for the fourth quarter of 2013. Net interest margin was 4.04% for the first quarter of 2014, as compared to 3.89% for the first quarter of 2013, and 4.16% for the fourth quarter of 2013. The primary factor causing the Company's linked quarter decline in net interest margin was the negative impact of the seasonal influx of public fund deposits and the resulting short-term liquidity described above.

Noninterest income was $18.6 million for the first quarter of 2014, as compared to $17.4 million for the first quarter of 2013, and $18.3 million for the fourth quarter of 2013. The Company's increase in noninterest income year-over-year is primarily attributable to the First M&F merger, notably a 31.44% increase in service charges and a 116.38% increase in insurance commissions and fees.

Noninterest expense was $47.6 million for the first quarter of 2014, as compared to $37.6 million for the first quarter of 2013, and $51.1 million for the fourth quarter of 2013. The Company recorded merger expenses associated with the First M&F acquisition of $195,000 and $1.9 million during the first quarter of 2014 and fourth quarter of 2013, respectively.  The Company did not record any merger expenses during the first quarter of 2013.  The Company's increase in noninterest expense as compared to the same period in 2013 was primarily due to the expenses of the acquired First M&F operations.

At March 31, 2014, total nonperforming loans (loans 90 days or more past due and nonaccrual loans) were $74.1 million and total other real estate owned ("OREO") was $47.7 million. The Company's nonperforming loans and OREO that were acquired either through the First M&F merger or in connection with FDIC-assisted transactions (collectively referred to as "acquired nonperforming assets") were $54.4 million and $22.6 million, respectively at March 31, 2014.

Since the acquired nonperforming assets were recorded at fair value at the time of acquisition or subject to loss-share agreements with the FDIC, which significantly mitigates our actual loss, the remaining information in this release on nonperforming loans, OREO and the related asset quality ratios excludes these acquired nonperforming assets. 

The Company's nonperforming loans were $19.7 million as of March 31, 2014, as compared to $28.0 million as of March 31, 2013. Nonperforming loans as a percentage of total loans were 0.67% as of March 31, 2014, as compared to 1.08% as of March 31, 2013.

Annualized net charge-offs as a percentage of average loans were 0.11% for the first quarter of 2014, as compared to 0.13% for the first quarter of 2013. The Company recorded a provision for loan losses of $1.5 million for the first quarter of 2014, as compared to $3.1 million for the first quarter of 2013.

The allowance for loan losses totaled $48.0 million at March 31, 2014, as compared to $46.5 million as of March 31, 2013, and $47.7 million as of December 31, 2013. The allowance for loan losses as a percentage of loans was 1.63% as of March 31, 2014, as compared to 1.79% as of March 31, 2013.

The Company's coverage ratio, or its allowance for loan losses as a percentage of nonperforming loans, was 244.06% as of March 31, 2014, as compared to 166.19% as of March 31, 2013. Loans 30 to 89 days past due as a percentage of total loans declined to 0.25% at March 31, 2014, as compared to 0.32% at March 31, 2013.  

OREO was $25.1 million as of March 31, 2014, as compared to $39.8 million as of March 31, 2013. In addition, during the first quarter of 2014, the Company experienced a significant reduction in costs associated with OREO as OREO expense decreased approximately 16.98% as compared to the first quarter of 2013.

"Our key performance drivers, specifically loan pipelines, low-costing deposits, credit metrics and operational efficiencies, continue to show positive trends and healthy outlooks," stated McGraw.  "In addition, now that the acquired First M&F operations are fully integrated, we believe we are beginning to experience the full synergies of our combined companies, and we remain well positioned to take advantage of strategic growth opportunities when available."

CONFERENCE CALL INFORMATION:

A live audio webcast of a conference call with analysts will be available beginning at 10:00 a.m. Eastern Time on Wednesday, April 23, 2014.

The webcast can be accessed through Renasant's investor relations website at www.renasant.com or http://services.choruscall.com/links/rnst140423.html. To access the conference via telephone, dial 1-888-317-6016 in the United States and request the Renasant Corporation First Quarter 2014 Earnings Webcast and Conference Call. International participants should dial 1-412-317-6016 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 10044091 or by dialing 1-412-317-0088 internationally and entering the conference number.  Telephone replay access is available until 9:00 a.m. Eastern Time on May 8, 2014.

ABOUT RENASANT CORPORATION:

Renasant Corporation is the parent of Renasant Bank, a 110-year-old financial services institution, and Renasant Insurance. Renasant has assets of approximately $5.9 billion and operates more than 120 banking, mortgage, financial services and insurance offices in Mississippi, Tennessee, Alabama and Georgia.

NOTE TO INVESTORS:

This news 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" 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, and that 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 our portfolio of outstanding loans, and competition in our markets. We undertake no 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 certain non-GAAP financial measures.  These non-GAAP financial measures adjust GAAP financial measures to exclude intangible assets, which the Company's management uses 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 can vary extensively from company to company and 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.

The specific non-GAAP financial measures used are return on average tangible shareholders' equity, return on average tangible assets and the ratio of tangible equity to tangible assets (commonly referred to as the "tangible capital ratio").  The presentation of this non-GAAP financial information is not 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 other 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.

Reconciliations of these 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."

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SOURCE Renasant Corporation