Renasant Corporation Announces 2015 First Quarter Earnings

TUPELO, Miss., April 28, 2015 /PRNewswire/ -- Renasant Corporation (NASDAQ: RNST) (the "Company") today announced financial results for the first quarter of 2015. Net income for the first quarter of 2015 was $15,240,000, or basic and diluted earnings per share ("EPS") of $0.48, as compared to $13,597,000, or basic and diluted EPS of $0.43, for the first quarter of 2014. 

For the first quarter of 2015, the Company's return on average assets and return on average equity were 1.06% and 8.59%, respectively, as compared to 0.93% and 8.19%, respectively, for the first quarter of 2014.  The Company's 2015 first quarter return on average tangible assets and return on average tangible equity were 1.18% and 15.45%, respectively, as compared to 1.05% and 16.05%, respectively, for the first quarter of 2014.

In December 2014, the Company announced a definitive merger agreement to acquire Heritage Financial Group, Inc. ("Heritage"), a bank holding company headquartered in Albany, Georgia, and the parent of HeritageBank of the South, in an all-stock merger. During the first quarter of 2015, the Company incurred merger expenses of approximately $478 thousand, or $0.01 in EPS, related to the Heritage merger.

"Our first quarter 2015 financial results reflect a strong start to what we expect to be a great year. These results are a continuation of superior returns on profitability metrics, as our return on tangible assets was 1.18%, and our return on tangible equity was 15.45%," said Renasant Chairman and Chief Executive Officer, E. Robinson McGraw. "When compared to the same quarter in 2014, we increased net income and EPS by 12% by growing revenue while at the same time holding noninterest expense flat. As we look forward, we believe we are well positioned to improve profitability and earnings growth during 2015."

Total assets as of March 31, 2015, were approximately $5.88 billion, as compared to $5.90 billion as of March 31, 2014, and $5.81 billion on a linked quarter basis.

Total deposits were $4.94 billion at March 31, 2015, as compared to $5.0 billion at March 31, 2014, and $4.84 billion at December 31, 2014. The Company's cost of funds was 43 basis points for the first quarter of 2015, as compared to 48 basis points for the same quarter in 2014.  The Company's noninterest-bearing deposits averaged approximately $932 million, or 19.1% of average deposits, for the first quarter of 2015, as compared to $949 million, or 18.9% of average deposits, for the first quarter of 2014.

Total loans, including loans acquired in either the First M&F Corporation ("First M&F") merger or in FDIC-assisted transactions (collectively referred to as "acquired loans"), were approximately $3.95 billion at March 31, 2015, as compared to $3.87 billion at March 31, 2014, and $3.99 billion on a linked quarter basis.

Excluding acquired loans, loans grew 11% to $3.27 billion at March 31, 2015, as compared to $2.95 billion at March 31, 2014.  On a linked quarter basis, non-acquired loans were $3.27 billion at December 31, 2014.

At March 31, 2015, the Company's Tier 1 leverage capital ratio was 9.75%, its Tier 1 risk-based capital ratio was 12.45%, and its total risk-based capital ratio was 13.50%. The Company's common equity Tier 1 capital ratio was 10.34% at March 31, 2015. 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 7.65% as of March 31, 2015.

Net interest income was $48.8 million for the first quarter of 2015, as compared to approximately $50.0 million for the first quarter of 2014. Net interest margin was 4.03% for the first quarter of 2015, as compared to 4.04% for the first quarter of 2014. Additional interest income recognized in connection with the acceleration of pay downs and payoffs from acquired loans was $590,000 in the first quarter of 2015 and increased net interest margin 5 basis points compared to $2.6 million and 21 basis point increase in net interest margin in the same period in 2014.

Noninterest income was $21.9 million for the first quarter of 2015, as compared to approximately $18.6 million for the first quarter of 2014, and $20.0 million for the fourth quarter of 2014. The Company's mortgage revenue increased 95% on a linked quarter basis due to increased production as a result of a decrease in rates and originator hires made in the latter part of 2014.

Noninterest expense was $47.4 million for the first quarter of 2015, as compared to approximately $47.6 million for the first quarter of 2014.

At March 31, 2015, total nonperforming loans (loans 90 days or more past due and nonaccrual loans) were $48.2 million, and total other real estate owned ("OREO") was $31.7 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 $29.3 million and $15.0 million, respectively at March 31, 2015.

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 $18.9 million as of March 31, 2015, as compared to $19.7 million as of March 31, 2014, and $20.2 million at December 31, 2014. Nonperforming loans as a percentage of total loans were 0.58% as of March 31, 2015, as compared to 0.67% as of March 31, 2014, and 0.62% as of December 31, 2014.

Annualized net charge-offs as a percentage of average loans remained the same at 0.11% for the first quarter of 2015, as compared to the first quarter of 2014. The Company recorded a provision for loan losses of $1.1 million for the first quarter of 2015, as compared to $1.5 million for the first quarter of 2014.

The allowance for loan losses totaled $42.3 million at March 31, 2015, as compared to $48.0 million as of March 31, 2014, and $42.3 million as of December 31, 2014. The allowance for loan losses as a percentage of loans was 1.29% as of March 31, 2015, as compared to 1.63% as of March 31, 2014, and 1.29% as of December 31, 2014.

The Company's coverage ratio, or its allowance for loan losses as a percentage of nonperforming loans, was 223.68% as of March 31, 2015, as compared to 244.06% as of March 31, 2014, and 209.49% as of December 31, 2014.   Loans 30 to 89 days past due as a percentage of total loans were 0.37% at March 31, 2015, as compared to 0.25% at March 31, 2014, and 0.32% at December 31, 2014.

OREO was $16.7 million as of March 31, 2015, as compared to $25.1 million as of March 31, 2014, and $17.1 million at December 31, 2014. During the first quarter of 2015, the Company experienced a significant reduction in costs associated with OREO as OREO expense decreased approximately 68.7% as compared to the first quarter of 2014.

"We see many positives on the horizon, specifically, healthy commercial loan pipelines which support our annual loan growth goals with a robust mortgage loan pipeline—both of which should drive continued revenue growth," stated McGraw. "Concurrently, we are working towards a successful merger and conversion with Heritage, which after receiving the required regulatory approval during the first quarter of 2015, we anticipate completing during the third quarter of 2015."

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 29, 2015.

The webcast can be accessed through Renasant's investor relations website at www.renasant.com or http://services.choruscall.com/links/rnst150429.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 10063653 or by dialing 1-412-317-0088 internationally and entering the conference number. Telephone replay access is available until May 13, 2015.

ABOUT RENASANT CORPORATION:

Renasant Corporation is the parent of Renasant Bank, a 111-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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