Renasant Corporation Announces 2015 Fourth Quarter And Year-End Results

TUPELO, Miss., Jan. 19, 2016 /PRNewswire/ -- Renasant Corporation (NASDAQ: RNST) (the "Company") today announced earnings results for the fourth quarter and year ended December 31, 2015. Net income for the fourth quarter of 2015 was approximately $21.2 million, up 35.67%, as compared to $15.6 million for the fourth quarter of 2014. Basic and diluted earnings per share ("EPS") were $0.53 and $0.52, respectively, for the fourth quarter of 2015, as compared to basic and diluted EPS of $0.49 for the fourth quarter of 2014.  Excluding the impact of after-tax merger expenses incurred during each quarter, basic and diluted EPS were $0.55 for the fourth quarter of 2015, as compared to basic and diluted EPS of $0.50 for the fourth quarter of 2014.

Net income for 2015 was $­­­­68.0 million, as compared to $59.6 million for 2014. Basic and diluted EPS were$1.89 and $1.88, respectively, for both 2015 and 2014.  Excluding the impact of after-tax merger expenses incurred during each year, basic and diluted EPS were $2.10 and $2.08, respectively, for 2015, as compared to basic and diluted EPS of $1.90 and $1.89, respectively, for 2014.

On July 1, 2015, the Company completed the acquisition of Heritage Financial Group, Inc. ("Heritage"), a bank holding company headquartered in Albany, Georgia, and the parent of HeritageBank of the South, a Georgia savings bank.  The Company's balance sheet and results of operations as of and for the year ended December 31, 2015, include the impact of Heritage's operations since the acquisition date.  At the acquisition date, Heritage had $2.02 billion in total assets, $1.11 billion in loans, and $1.37 billion in deposits.  The assets acquired and liabilities assumed are recorded at estimated fair value and are subject to change pending finalization of all valuations.

"Our financial results for the fourth quarter of 2015 represent a strong finish to a great year.  The results include our successful completion of the Heritage acquisition and 24.58% annualized linked quarter legacy loan growth," commented Renasant Chairman and Chief Executive Officer, E. Robinson McGraw. "Excluding merger expenses on an after-tax basis, our diluted EPS of $0.55 per share represents some of the highest reported quarterly earnings for the Company and was driven by the strong performance of our legacy company coupled with the successful conversion of Heritage's operations.  Furthermore, the continued sustainability of this profitability is reflected in our return on average assets, excluding merger expenses on an after-tax basis, of 1.12% for the quarter, marking the seventh consecutive quarter we've achieved greater than 1.00% return on average assets. As we look to 2016, we believe we are well positioned to continue to improve on profitability and earnings growth, which in turn will generate shareholder value."

The following table presents the Company's profitability metrics for the fourth quarter of 2015 including and excluding the impact of after-tax merger expenses from the Heritage acquisition:

The following table presents the Company's profitability metrics for the year ending December 31, 2015, including and excluding the impact of after-tax merger expenses from the Heritage acquisition:

Total assets at December 31, 2015, were approximately $7.94 billion, as compared to $5.81 billion at December 31, 2014.

Total loans, including loans acquired in the Heritage and First M&F Corporation ("First M&F") acquisitions or in FDIC-assisted transactions (collectively referred to as "acquired loans"), increased 35.75% to approximately $5.41 billion at December 31, 2015, as compared to $3.99 billion at December 31, 2014. Excluding acquired loans, loans grew 17.23% to $3.83 billion at December 31, 2015, as compared to $3.27 billion at December 31, 2014.

Total deposits were $6.22 billion at December 31, 2015, as compared to $4.84 billion at December 31, 2014. The increase in deposits is primarily attributable to the acquisition of Heritage.  The Company's noninterest-bearing deposits averaged approximately $1.32 billion, or 21.36% of average deposits, for the fourth quarter of 2015, as compared to $937 million, or 19.58% of average deposits, for the fourth quarter of 2014. The Company's cost of funds was 31 basis points for the fourth quarter of 2015, as compared to 45 basis points for the same quarter in 2014.

At December 31, 2015, the Company's Tier 1 leverage capital ratio was 9.18%, its Common Equity Tier 1 risk-based capital ratio was 9.98%, its Tier 1 risk-based capital ratio was 11.50%, and its total risk-based capital ratio was 12.30%. The Company's regulatory capital ratios continue to be in excess of the regulatory minimums required to be classified as "well-capitalized."  At December 31, 2015, our tangible common equity ratio was 7.56%.  

Net interest income was $72.4 million for the fourth quarter of 2015, as compared to $50.0 million for the fourth quarter of 2014. Net interest margin was 4.33% for the fourth quarter of 2015, as compared to 4.09% for the fourth quarter of 2014.  Additional interest income recognized in connection with the acceleration of pay downs and payoffs from acquired loans increased net interest margin 21 basis points in the fourth quarter of 2015, as compared to 11 basis points in the same period in 2014.

Net interest income was $241.6 million for the year ended December 31, 2015, as compared to $202.6 million for the year ended December 31, 2014.  Net interest margin was 4.17% for 2015, as compared to 4.12% for the prior year.  Additional interest income recognized in connection with the acceleration of pay downs and payoffs from acquired loans increased net interest margin 14 basis points for all of 2015, as compared to 17 basis points for the prior year.

The Company's noninterest income is derived from diverse lines of business which primarily consist of mortgage, wealth management and insurance revenue sources along with income from deposit and loan products. For the fourth quarter of 2015, noninterest income increased to $31.5 million, as compared to $20.0 million for the fourth quarter of 2014. Noninterest income increased to $108.4 million during 2015, as compared to $80.6 million during 2014.  The Company's growth in noninterest income for both the fourth quarter and full year of 2015, as compared to the comparable periods in the prior year, is primarily attributable to the Heritage acquisition and growth in our mortgage lending. 

Noninterest expense was $70.9 million for the fourth quarter of 2015, and $245.5 for the year 2015, as compared to $46.0 million for the fourth quarter of 2014, and $191.2 million for the year 2014. The increase in noninterest expense, when compared to the comparable periods in 2014, was primarily due to the operating expenses of the acquired Heritage operations as well as merger expenses incurred in connection with the Heritage acquisition. The Company recorded merger expenses of approximately $1.92 million and $499 thousand during the fourth quarter of 2015 and 2014, respectively.  The Company recorded merger expenses of approximately $11.6 million and $694 thousand during 2015 and 2014, respectively.

The Company recorded a provision for loan losses of $1.8 million for the fourth quarter of 2015, as compared to $1.1 million for the fourth quarter of 2014.  For the fourth quarter of 2015, net charge-offs were $1.4 million, as compared to $3.3 million in net charge-offs for the same period in 2014. Annualized net charge-offs as a percentage of average loans were 0.10% for the fourth quarter of 2015, as compared to 0.33% for the same quarter in 2014.

The allowance for loan losses as a percentage of total loans was 0.78% at December 31, 2015, as compared to 1.06% at December 31, 2014.  The allowance for loan losses as a percentage of non-acquired loans was 1.11% at December 31, 2015, as compared to 1.29% at December 31, 2014.   

At December 31, 2015, total nonperforming loans (loans 90 days or more past due and nonaccrual loans) were $45.4 million, or 0.84% of total loans, and total other real estate owned ("OREO") was $35.4 million, as compared to total nonperforming loans of $55.1 million, or 1.38% of total loans, and total OREO of $34.5 million at December 31, 2014. The Company's nonperforming loans and OREO that were acquired through the Heritage and First M&F acquisitions or in connection with FDIC-assisted transactions (collectively referred to as "acquired nonperforming assets") were $30.0 million and $22.4 million, respectively, at December 31, 2015, as compared to $34.9 million and $17.4 million, respectively at December 31, 2014. 

Since the acquired nonperforming assets were recorded at fair value at the time of acquisition or are 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.

Nonperforming assets decreased 23.85% to $28.4 million at December 31, 2015, as compared to $37.3 million at December 31, 2014.

Nonperforming loans were $15.4 million, or 0.40% of total non-acquired loans, at December 31, 2015, as compared to $20.2 million, or 0.62% of total non-acquired loans, at December 31, 2014, representing a 23.73% decrease. Early stage delinquencies, or loans 30-to-89 days past due, as a percentage of total loans were 0.20% at December 31, 2015, as compared to  0.32% at December 31, 2014.

OREO was $13.0 million at December 31, 2015, as compared to $17.1 million at December 31, 2014, a 23.99% decrease. The Company continues to proactively market the properties held in OREO as it sold approximately $5.87 million of OREO during 2015, with $1.10 million in sales occurring during the fourth 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, January 20, 2016.

The webcast can be accessed through Renasant's investor relations website at www.renasant.com or http://services.choruscall.com/links/rnst160120. To access the conference via telephone, dial 1-877-513-1143 in the United States and request the Renasant Corporation Fourth 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 10079062 or by dialing 1-412-317-0088 internationally and entering the same conference number. Telephone replay access is available until February 3, 2016.

ABOUT RENASANT CORPORATION:

Renasant Corporation is the parent of Renasant Bank, a 111-year-old financial services institution. Renasant has assets of approximately $7.9 billion and operates more than 170 banking, mortgage, financial services and insurance offices in Mississippi, Tennessee, Alabama, Florida 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."