Renasant Corporation Announces Dividend Increase And First Quarter 2019 Earnings

TUPELO, Miss., April 23, 2019 /PRNewswire/ -- Renasant Corporation (NASDAQ: RNST) (the "Company") today announced earnings results for the first quarter of 2019. Net income for the first quarter of 2019 was $45.1 million, as compared to $33.8 million for the first quarter of 2018. Basic and diluted earnings per share ("EPS") were $0.77 for the first quarter of 2019, as compared to basic and diluted EPS of $0.69 and $0.68, respectively, for the first quarter of 2018.

In addition, on April 23, 2019, the Board of Directors of the Company declared a quarterly cash dividend of $0.22 per share to be paid on June 28, 2019 to shareholders of record as of June 14, 2019.  The per share dividend represents a $0.01 increase from the dividend paid in the previous quarter and the fifth dividend increase since March 31, 2016.

"We're proud of our results for the first quarter of 2019, in which we again achieved record EPS," said Renasant Executive Chairman, E. Robinson McGraw. "Our strong earnings, coupled with our superior profitability metrics, is evidence that we continue to generate robust levels of capital at a consistent pace.  Yesterday, our board approved an increase to our quarterly cash dividend to $0.22, the third increase over the past year.  We will continue to prudently manage our capital and take advantage of other opportunities to return value to our shareholders."

"Our first quarter results prove our commitment to enhancing our profitability while at the same time effectively managing risk," said Renasant President and CEO, C. Mitchell Waycaster. "We remained disciplined in our pricing decisions and prudent in our underwriting standards such that we maintained a stable core margin without sacrificing credit quality.  Furthermore, we are excited about the additional talent we have added over the last two quarters throughout our footprint.  We also intend to take advantage of ongoing market disruptions to bring seasoned lenders and bankers to our team, positioning us well for continued growth during 2019."

Impact of Certain Expenses and Charges

From time to time, the Company incurs expenses and charges in connection with certain transactions with respect to which management is unable to accurately predict 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, except per share data):

A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading "Non-GAAP Financial Measures" explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.

Profitability Metrics

The following table presents the Company's profitability metrics, including and excluding the impact of after-tax merger and conversion expenses, for the dates presented:

Financial Condition

Total assets were $12.86 billion at March 31, 2019, as compared to $12.93 billion at December 31, 2018.

While total loans, excluding loans held for sale, at March 31, 2019 grew only slightly when compared to December 31, 2018, loans not purchased increased $175.9 million to $6.57 billion at March 31, 2019 as compared to $6.39 billion at December 31, 2018. Loan production for the first quarter of 2019 was $373.6 million as compared to $396.6 million for the same period in 2018.

Total deposits increased to $10.3 billion at March 31, 2019, from $10.1 billion at December 31, 2018. Non-interest bearing deposits averaged $2.3 billion, or 23.1% of average deposits, for the first quarter of 2019, compared to $1.8 billion, or 22.4% of average deposits, for the same period in 2018.

At March 31, 2019, Tier 1 leverage capital ratio was 10.44%, Common Equity Tier 1 ratio was 11.49%, Tier 1 risk-based capital ratio was 12.55%, and total risk-based capital ratio was 14.57%. All regulatory ratios exceed the minimums required to be considered "well-capitalized."

Our ratio of shareholders' equity to assets was 16.24% at March 31, 2019, as compared to 15.80% at December 31, 2018. Our tangible capital ratio (non-GAAP) was 9.36% at March 31, 2019, as compared to 8.92% at December 31, 2018.

The Company announced a $50.0 million stock repurchase program in October 2018 under which $42.9 million was available as of December 31, 2018.  No shares were repurchased in the first quarter of 2019. The plan will remain in effect until the earlier of October 2019 or the repurchase of the entire amount of common stock authorized to be repurchased by the Board of Directors.

Results of Operations

Net interest income was $113.1 million for the first quarter of 2019, as compared to $115.5 million for the fourth quarter of 2018 and $89.2 million for the first quarter of 2018. The following table presents reported taxable equivalent net interest margin and yield on loans, including loans held for sale, for the periods presented (in thousands).

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

For the first quarter of 2019, the cost of total deposits was 79 basis points, as compared to 67 basis points for the fourth quarter of 2018 and 40 basis points in the first quarter of 2018. The table below presents, by type, our funding sources and the total cost of each funding source for the periods presented:

Noninterest income for the first quarter of 2019 was $35.9 million, as compared to $36.4 million for the fourth quarter of 2018 and $34.0 million for the first quarter of 2018. Mortgage banking income for the first quarter of 2019 was $10.4 million, compared to $12.0 million for the fourth quarter of  2018 and $11.0 million for the first quarter of 2018. Brand Mortgage Group, LLC, which was divested on November 1, 2018, contributed $2.0 million to mortgage banking income during the fourth quarter of 2018.

Noninterest expense was $88.8 million for the first quarter of 2019, as compared to $93.3 million for the fourth quarter of 2018 and $77.9 million for the first quarter of 2018.

Excluding charges for merger and conversion expenses, amortization of intangible assets and gains and losses on the sale of securities, the Company's efficiency ratio (non-GAAP) was 57.62%  for the first quarter of 2019 as compared to 58.39% for the fourth quarter of 2018 and 60.43% for the first quarter of 2018. By effectively managing expenses while at the same time focusing on margin expansion and diversification of revenue streams, the Company has maintained an efficiency ratio below 60% for each of the past four quarters, which has been a long-term goal of the Company.

Asset Quality Metrics

Total nonperforming assets were $37.2 million at March 31, 2019, as compared to $37.0 million at December 31, 2018, and consisted of $27.0 million in nonperforming loans (loans 90 days or more past due and nonaccrual loans) and $10.2 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 $13.3 million and $5.9 million, respectively, at March 31, 2019, as compared to $13.1 million and $6.2 million, respectively, at December 31, 2018. 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.

• Non-purchased nonperforming loans were $13.7 million, or 0.21% of total non-purchased loans, at March 31, 2019, as compared to $12.9 million, or 0.20% of total non-purchased loans, at December 31, 2018. Early stage delinquencies, or loans 30-to-89 days past due, as a percentage of total non-purchased loans were 0.35% at March 31, 2019, as compared to 0.27% at December 31, 2018.
• Non-purchased OREO was $4.2 million at March 31, 2019, as compared to $4.9 million at December 31, 2018. Non-purchased OREO sales totaled $802 thousand in the first quarter of 2019.
• The allowance for loan losses was 0.55% of total loans held for investment at March 31, 2019 , as compared to 0.54% at December 31, 2018. The allowance for loan losses was 0.76% of total non-purchased loans at March 31, 2019, as compared to 0.77% at December 31, 2018.
• Net loan charge-offs were $691 thousand, or 0.03% of average loans held for investment on an annualized basis, for the first quarter of 2019, as compared to $584 thousand, or 0.03% of average loans held for investment on an annualized basis, for the fourth quarter of 2018.
• The provision for loan losses was $1.5 million for the first quarter of 2019, as compared to $1.0 million for the fourth quarter of 2018 and $1.8 million for the first quarter of 2018.

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, April 24, 2019.

The webcast can be accessed through Renasant's investor relations website at www.renasant.com or https://services.choruscall.com/links/rnst190424.html. To access the conference via telephone, dial 1-877-513-1143 in the United States and request the Renasant Corporation First 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 10130580 or by dialing 1-412-317-0088 internationally and entering the same conference number. Telephone replay access is available until May 8, 2019.

ABOUT RENASANT CORPORATION:
Renasant Corporation is the parent of Renasant Bank, a 115-year-old financial services institution. Renasant has assets of approximately $12.9 billion and operates more than 190 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 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, net income (or earnings), with exclusions, 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/or certain charges (such as merger and conversion expenses and debt prepayment penalties) with respect to which the Company is unable to accurately predict when these charges will be incurred or, when incurred, the amount thereof. 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 indicators 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 charges such as merger and conversion expenses 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.