Renasant Corporation Announces 2015 Second Quarter Earnings

TUPELO, Miss., July 21, 2015 /PRNewswire/ -- Renasant Corporation (NASDAQ: RNST) (the "Company") today announced financial results for the second quarter of 2015. Net income for the second quarter of 2015 was $15,394,000, or basic and diluted earnings per share ("EPS") of $0.49 and $0.48, respectively, as compared to $14,853,000, or basic and diluted EPS of $0.47, for the second quarter of 2014.

On July 1, 2015, the Company acquired by merger 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 combined company has approximately $7.77 billion in total assets with 171 banking, mortgage, wealth management, investment and insurance offices throughout Mississippi, Tennessee, Alabama, Georgia and Florida.  During the second quarter of 2015, the Company incurred pre-tax merger expenses related to the Heritage merger of approximately $1,467,000, or $906,000 on an after-tax basis, which equated to a reduction of $0.03 in diluted EPS for the second quarter of 2015.

For the second quarter of 2015, the Company's return on average assets and return on average equity were 1.06% and 8.42%, respectively, as compared to 1.02% and 8.67%, respectively, for the second quarter of 2014.  The Company's 2015 second quarter return on average tangible assets and return on average tangible shareholders' equity were 1.17% and 14.89%, respectively, as compared to 1.15% and 16.55%, respectively, for the second quarter of 2014.

"We are pleased with our second quarter financial results highlighted by 16.37% annualized linked quarter non-acquired loan growth and strong revenue growth driven from our mortgage operations.  Focusing on profitability for the quarter, our diluted earnings per share of $0.48 continues to represent some of the highest quarterly operating earnings in the 111-year history of our company excluding quarters which recognized one-time gains associated with acquisitions," commented Renasant Chairman and Chief Executive Officer, E. Robinson McGraw.  "The sustainability of this profitability is reflected in our return on average assets of 1.06% for the quarter, marking the fifth consecutive quarter we've achieved greater than 1.00% return on average assets."

Total assets as of June 30, 2015, were approximately $5.90 billion, as compared to $5.88 billion on a linked quarter basis and $5.81 billion as of December 31, 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 $4.04 billion at June 30, 2015, as compared to $3.95 billion on a linked quarter basis and $3.99 billion as of December 31, 2014.

Excluding acquired loans, loans grew 4.30%, or 8.67% annualized, to $3.41 billion at June 30, 2015, as compared to $3.27 billion at December 31, 2014 and increased 4.08%, or 16.37% annualized, from $3.27 billion at March 31, 2015.

Total deposits were $4.89 billion at June 30, 2015, as compared to $4.84 billion at December 31, 2014, and $4.89 billion at June 30, 2014. The Company's cost of funds was 40 basis points for the second quarter of 2015, as compared to 48 basis points for the same quarter in 2014.  The Company's noninterest-bearing deposits averaged approximately $970 million, or 19.97% of average total deposits, for the second quarter of 2015, as compared to $937 million, or 19.58% for the fourth quarter of 2014, and $905 million, or 18.38% for the second quarter of 2014.

At June 30, 2015, the Company's Tier 1 leverage capital ratio was 9.90%, its common equity Tier 1 capital ratio was 10.44%, its Tier 1 risk-based capital ratio was 12.52%, and its total risk-based capital ratio was 13.54%. The Company's regulatory capital ratios continued to be in excess of the regulatory minimums required to be classified as "well-capitalized."

"Looking at our capital levels, our tangible common equity ratio stands at 7.78% at June 30, 2015, which, coupled with our strong regulatory capital ratios, will continue to support future balance sheet growth whether organic or the result of additional external opportunity," said McGraw.

Net interest income was $51.67 million for the second quarter of 2015, as compared to $52.17 million for the second quarter of 2014. Net interest margin was 4.17% for the second quarter of 2015, compared to 4.24% for the second quarter of 2014. Additional interest income recognized in connection with the acceleration of pay downs and payoffs from acquired loans was $3.60 million in the second quarter of 2015, which increased net interest margin 28 basis points, compared to $3.52 million, which is a 28 basis point increase in net interest margin for the same period in 2014.

Noninterest income increased 17.70% to $22.92 million for the second quarter of 2015, as compared to $19.47 million for the second quarter of 2014. The increase in noninterest income was primarily attributable to growth in the Company's mortgage operations and resulting mortgage income.

Noninterest expense was $51.18 million for the second quarter of 2015, as compared to approximately $49.40 million for the second quarter of 2014.  The increase in the Company's noninterest expense was primarily attributable to an increase in salary and employee benefits as well as merger related expenses.  The increase in salaries and employee benefits was due to higher levels of commissions paid in our mortgage banking division. 

At June 30, 2015, total nonperforming loans (loans 90 days or more past due and nonaccrual loans) were $44.26 million, and total other real estate owned ("OREO") was $27.06 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 $23.10 million and $12.10 million, respectively at June 30, 2015.

Since the acquired nonperforming assets were recorded at fair value at the time of acquisition and/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. 

The Company's nonperforming loans were $21.16 million as of June 30, 2015, as compared to $20.19 million at December 31, 2014. Nonperforming loans as a percentage of total loans were 0.62% as of June 30, 2015 and December 31, 2014.  The increase in nonperforming loans at June 30, 2015, was primarily due to a $2.8 million matured loan which was carried as 90 days past due at June 30, 2015 but has since been resolved through pay-off.

Annualized net charge-offs as a percentage of average loans were 0.16% for the second quarter of 2015, as compared to 0.23% for the same period in 2014. The Company recorded a provision for loan losses of $1.18 million for the second quarter of 2015, as compared to $1.45 million for the second quarter of 2014.

The allowance for loan losses totaled $41.89 million at June 30, 2015, as compared to $42.29 million as of December 31, 2014. The allowance for loan losses as a percentage of loans was 1.23% as of June 30, 2015, as compared to 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 197.95% as of June 30, 2015, as compared to 209.49% as of December 31, 2014.   Loans 30 to 89 days past due as a percentage of total loans were 0.19% at June 30, 2015, as compared to 0.32% at December 31, 2014.

OREO was $14.97 million as of June 30, 2015, as compared to $17.09 million at December 31, 2014.

"We continue to see many opportunities on the horizon, specifically strong 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. "With the addition of the Heritage team, its customers and operations, we continue to be well positioned to accelerate profitability and earnings growth, which in turn, we believe will generate shareholder value."

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, July 22, 2015.

The webcast can be accessed through Renasant's investor relations website at www.renasant.com or http://services.choruscall.com/links/rnst150722. To access the conference via telephone, dial 1-877-513-1143 in the United States and request the Renasant Corporation Second 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 10069391 or by dialing 1-412-317-0088 internationally and entering the conference number. Telephone replay access is available until August 5, 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 $7.77 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 "average tangible shareholders' equity").  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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