Renasant Corporation · NYSE:RNST
Renasant — Q2 2020 Earnings Presentation
46 slides from Renasant's earnings presentation, Aug 10, 2020
Slide 1: Q2 2020 Investor Presentation
Q2 2020 Investor Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain various statements about Renasant Corporation (“Renasant,” “we,” “our,” or “us”) that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchan
Slide 3: Current Footprint
Current Footprint More than 200 banking, lending, wealth management and insurance offices Destin 3
Slide 4: Four Key Strategic Initiatives
Four Key Strategic Initiatives • Focus on highly-accretive acquisition opportunities Capitalize on • Leverage existing markets Opportunities • Seek new markets • New lines of business • Superior returns • Revenue growth / Expense control Enhance Profitability • Net interest margin expansion / mitiga
Slide 5: Renasant Footprint – June 2010 Financial Highlights
Renasant Footprint – June 2010 Financial Highlights Assets $3.59 Billion Gross Loans* $2.28 Billion Deposits $2.69 Billion Source: SNL Financial 5 * Excludes loans held for sale 5
Slide 6: Market Expansion Since 2010
Market Expansion Since 2010 2018 Whole Bank Transaction: Brand Group Holdings, Inc. | Lawrenceville, GA | Assets: $2.3 billion Whole Bank Transaction: Metropolitan BancGroup, Inc. | Ridgeland, MS | Assets: $1.2 billion 2017 De novo expansion: Mobile, AL 2016 Whole Bank Transaction: KeyWorth Bank | A
Slide 7: Opportunities and Talent Acquisition
Opportunities and Talent Acquisition Strategic Production and Support Hires since January 2019 - HealthCare RM -CRE • Added just under 50 - Head of Retail Banking - Commercial RMs revenue producers - C&I Middle Market across our footprint, including corporate banking team led by - C&I Middle Market
Slide 8: Current Footprint
Current Footprint Over 200 banking, lending, wealth management and insurance offices Highlights1 Assets $14.90 Billion Gross Loans2,3 $11.00 Billion Deposits $11.85 Billion Destin 1 As of June 30, 2020 2 Excludes loans held for sale 3 Includes $1.3 billion in PPP loans 8
Slide 9: Four Key Strategic Initiatives
Four Key Strategic Initiatives • Focus on highly-accretive acquisition opportunities Capitalize on • Leverage existing markets Opportunities • Seek new markets • New lines of business • Superior returns • Revenue growth / Expense control Enhance Profitability • Net interest margin expansion / mitiga
Slide 10: Total Assets
Total Assets $16,000 $14,897 $13,901 $14,000 $13,401 $12,935 $12,000 $9,830 $10,000 $8,670 $7,936 $8,000 $5,805 $6,000 $4,000 $2,000 $0 2014 2015 2016 2017 2018 2019 1Q20 2Q20 (In millions) Total Assets Deposits 10
Slide 11: Diluted Earnings per Share (Adjusted)
Diluted Earnings per Share (Adjusted)* EPS, with exclusions 4Q19 1Q20 2Q20 $0.70 EPS (GAAP) $.67 $.65 Diluted EPS, as reported$ 0.67 $ 0.04 $ 0.36 EPS (Adjusted)* MSR valuation adjustment (0.02) 0.12 0.07 $0.60 $.52 COVID-19 related expenses - 0.04 0.09 $0.50 Diluted EPS (adjusted) (Non-GAAP) $ 0.65
Slide 12: Profitability
Profitability $ in thousands 2Q19 3Q19 4Q19 1Q20 2Q20 Net income$ 46,625 $ 37,446 $ 38,414 $ 2,008 $ 20,130 Merger and conversion expense 179 24 76 - - Debt prepayment penalties - 54 - - 90 MSR valuation adjustment - 3,132 (1,296) 9,571 4,951 COVID-19 related expenses - - - 2,903 6,257 Provision for
Slide 13: Profitability, cont. Efficiency Ratio (Adjusted)
Profitability, cont. Efficiency Ratio (Adjusted)1 80.00% 75.00% 68.7% 70.00% 63.8% 63.7% 65.00% 63.0% 60.4% 60.9% 59.6% 59.2% 60.00% 55.00% 50.00% 45.00% 40.00% 2014 2015 2016 2017 2018 2019 1Q20 2Q20 1 Efficiency Ratio (adjusted) is a non-GAAP financial measure and excludes (if applicable to the re
Slide 14: Total Portfolio Loans
Total Portfolio Loans* $12,000,000 At June 30, 2020, loans totaled $10.997 billion Includes $1.3 billion in PPP loans $10,000,000 80% Non Purchased 20% Purchased $8,000,000 Non Owner Occupied Multifamily 22% 4% Land Dev $6,000,000 2% Owner Occupied 17% $4,000,000 $2,000,000 1-4 Family 29% $0 C
Slide 15: Focus on Core Funding
Focus on Core Funding $4,000,000 Noninterest Bearing Demand Deposits 2Q20 Deposits $3,500,000 $3,000,000 Noninterest- bearing $2,500,000 17% $2,000,000 31% Other Interest- 7% bearing $1,500,000 $1,000,000 Savings $500,000 45% $- Time ($ in thousands) Liquidity • During 2Q20, total deposit growth of
Slide 16: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin 6.00% 6.00% 5.00% 5.00% 4.00% 4.00% 3.00% 3.00% Margin Yield/Cost 2.00% 2.00% 1.00% 1.00% 0.00% 0.00% 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Yield on Earning Assets Cost of Funds Margin ($ in thousands) 2014 2015 2016 2017 2018 1Q19 2Q19 3Q
Slide 17: Net Interest Margin, cont.
Net Interest Margin, cont. Earning Asset Mix Earning Asset Mix QTD Average 4Q19 QTD Average 2Q20 Loans, excl. 2% 4% 11% Loans, excl. 10% PPP PPP 3% 3% PPP loans MLHFS 7% MLHFS Securities 76% 84% Securities ST Investments ST Investments Reconciliation of Net Interest Margin - 2Q20 Reconciliation of N
Slide 18: Deposit Repricing Opportunities
Deposit Repricing Opportunities Cost of Deposit Trends Actions taken since March: • Aggressively reduced stated rates on NOW, 1.10% 1.09% MM and CDs 1.00% • Repriced Special MM and Public Fund rates 0.90% 0.84% Results since March 31: 0.80% • Interest Bearing deposit cost fell 27 bps 0.70% 0.70% Rep
Slide 19: Non Interest Income (adjusted)
Non Interest Income (adjusted)* ($ in thousands) Non Interest Income (adjusted)* • Diversified sources of noninterest income $80,000 • $69,090 Effect of Durbin Amendment reduced fees and commissions $70,000 by approximately $3.0 million in each of 3Q19, 4Q19, 1Q20 and 2Q20 $60,000 $47,141 $50,000 •
Slide 20: Four Key Strategic Initiatives
Four Key Strategic Initiatives • Focus on highly-accretive acquisition opportunities Capitalize on • Leverage existing markets Opportunities • Seek new markets • New lines of business • Superior returns • Revenue growth / Expense control Enhance Profitability • Net interest margin expansion / mitiga
Slide 21: Asset Quality Metrics
Asset Quality Metrics Loans 30-89 Days Past Due/ Classified Loans/Total Loans(1) (1) Total Loans $180,000 2.00% $50,000 0.60% $160,000 1.80% $140,000 1.60% 0.50% $40,000 $120,000 1.40% 1.20% 0.40% $100,000 $30,000 1.00% $80,000 0.30% 0.80% $20,000 $60,000 0.20% 0.60% $40,000 0.40% $10,000 0.10% $20,
Slide 22: Asset Quality Metrics, cont.
Asset Quality Metrics, cont. NPAs/Total Assets(1) Net Charge-offs/Average Loans(1) $60,000 0.45% $3,000 $2,700 0.14% $50,000 0.40% $2,400 0.12% $40,000 $2,100 0.35% 0.10% $1,800 $30,000 0.08% 0.30% $1,500 $20,000 $1,200 0.06% $10,000 0.25% $900 0.04% $600 $- 0.20% $300 0.02% ($ in thousands) $- 0.00
Slide 23: Asset Quality Metrics, cont.
Asset Quality Metrics, cont. Allowance/Total Loans Allowance/Nonperforming Loans $140,000 1.60% $140,000 700.00% 1.40% $120,000 $120,000 600.00% 1.20% $100,000 $100,000 500.00% 1.00% $80,000 $80,000 400.00% 0.80% $60,000 300.00% $60,000 0.60% 200.00% $40,000 0.40% $40,000 $20,000 0.20% $20,000 100.0
Slide 24: Current Expected Credit Losses
Current Expected Credit Losses CECL Day 1 Transition 12/31/2019 Incurred Loss 1/1/2020 CECL Adoption ALLL as a % of ACL as a % of ($ in thousands) ALLL Loans ACL Loans Commercial, Financial, Agricultural $ 10,658 0.78%$ 22,009 1.61% Lease Financing Receivables 910 1.11% 1,431 1.75% Real Estate - 1-4
Slide 25: CECL 2020 Reserve Build
CECL 2020 Reserve Build 1/1/2020 CECL Adoption 3/31/2020 CECL 6/30/2020 CECL ACL as a % of ACL as a % of ACL as a % of ($ in thousands) ACL Loans ACL Loans ACL Loans SBA Paycheck Protection Program - - - - $ - 0.00% Commercial, Financial, Agricultural $ 22,009 1.61%$ 25,937 1.82% 30,685 2.26% Lease
Slide 26: Loan Portfolio
Loan Portfolio* As of June 30, 2020 • Legacy of proactive portfolio management and Consumer Const 4% 8% Land Dev prudent credit underwriting C&I 2% 14% • Granular loan portfolio: 1-4 Family o Average loan size is approximately 29% $110,000 o No single commercial collateral type exceeds 7% of total p
Slide 27: Commercial Loan Portfolio
Commercial Loan Portfolio As of June 30, 20201 Office Manufacturing 5% Finance and Insurance 9% Health Care and Social 4% Assistance 9% Real Estate and Rental Multi Family and Leasing 8% 10% Hospitality Restaurants & Other & Other Food Services Accommodat 4% ions 5% Retail Trade 12% Industries < 3%
Slide 28: C&D and CRE Loan Concentration Levels
C&D and CRE Loan Concentration Levels Acquisition, Development & Construction (ADC) and Commercial Real Estate (CRE) ADC Loans as a Percentage of CRE Loans (Construction & Perm) as a Risk Based Capital* Percentage of Risk Based Capital* 100% 300% 91% 89% 89% 89% 88% 86% 85% 87% 85% 84% 84% 82% 250%
Slide 29: Credit Quality Overview
Credit Quality Overview • Early identification of portfolios that may be more sensitive to COVID-19 related impact • Proactively reached out to clients to understand the potential impact on their business activities • Identified Hospitality, Restaurant, Entertainment and Retail Trade as more sensiti
Slide 30: Loan Deferral Program
Loan Deferral Program • As of June 30, 2020, approximately 21% of total loan portfolio, excluding PPP loans, under the deferral program • As of August 5, 2020, approximately 12.3% of total loan portfolio, excluding PPP loans, under the deferral program • In mid-March, the Company offered a 90-day de
Slide 31: Continuing Credit Enhancement
Continuing Credit Enhancement • Rolled out a phase 2 commercial loan deferral program with requirement to underwrite the customer’s deferral needs and creditworthiness • Instituted a monthly loan risk rating upgrade/downgrade committee to manage consistency of risk rating migration and portfolio str
Slide 32: Higher Risk Industries
Higher Risk Industries Hospitality Portfolio by Flag1 Entertainment Portfolio by Type1 Independent Other 9% Golf National Other Flags Courses Marriott 23% 8% 24% Wyndham 32% 3% Holiday Inn (IHG) 14% Fitness Theaters Centers 12% 17% Sports Facilities/Instruction Marinas 5% Hilton 19% 34% • Entertainm
Slide 33: Higher Risk Industries, cont.
Higher Risk Industries, cont. Restaurant Portfolio by Type1 Retail Trade Portfolio by Type1 Other Other Auto Dealers 4% 15% 13% Full-Service 45% Single Tenant 19% Grocery Limited- Anchored Service Unanchored 4% 51% Multi- Tenant Other 34% Anchored 15% • Restaurant represents 2.7% of total loans • Re
Slide 34: CARES Act and Paycheck Protection Program (PPP)
CARES Act and Paycheck Protection Program (PPP) • Our approach • Lenders were hands on with the customers – not an online application portal • Credit was included in approval process to verify PPP underwriting requirements were satisfied • Utilized technology to improve efficiency • Offered to clien
Slide 35: Four Key Strategic Initiatives
Four Key Strategic Initiatives • Focus on highly-accretive acquisition opportunities Capitalize on • Leverage existing markets Opportunities • Seek new markets • New lines of business • Superior returns • Revenue growth / Expense control Enhance Profitability • Net interest margin expansion / mitiga
Slide 36: Strong Capital Position
Strong Capital Position Minimum to Capital Strong Capital2014 2015 Position 2016 2017 2018 2019 1Q20 2Q20 be Well Ratio Capitalized Tangible Common 7.52% 7.54% 9.00% 9.56% 8.92% 9.25% 8.48% 7.97% N/A Equity* Leverage 9.53% 9.16% 10.59% 10.16% 10.11% 10.37% 9.90% 9.12% 5.00% Tier 1 Risk 12.45% 11.51%
Slide 37: Consistent and Strong Dividend
Consistent and Strong Dividend Dividends Per Share – Annually Dividends Per Share – Quarterly $1.00 $0.25 $0.90 $0.80 $0.20 $0.70 $0.60 $0.15 $0.50 $0.40 $0.10 $0.30 $0.20 $0.05 $0.10 $0.00 $0.00 37
Slide 38: Poised for Growth with Added Shareholder Value
Poised for Growth with Added Shareholder Value . $14.9B franchise well positioned in attractive markets in the Southeast . Strategic focus on expanding footprint • Acquisition • De Novo • New lines of business . Opportunity for further profitability improvement . Organic loan growth . Core deposit g
Slide 39: Appendix
Appendix 39
Slide 40: Reconciliation of Non-GAAP Disclosures: Tangible Common Equity
Reconciliation of Non-GAAP Disclosures Tangible Common Equity $ in thousands 2014 2015 2016 2017 2018 Actual shareholders' equity (GAAP)$ 711,651 $ 1,036,818 $ 1,232,883 $ 1,514,983 $ 2,043,913 Intangibles 297,330 474,682 494,608 635,556 977,793 Actual tangible shareholders' equity (non-GAAP)$ 414,3
Slide 41: Reconciliation of Non-GAAP Disclosures: Efficiency Ratio
Reconciliation of Non-GAAP Disclosures Efficiency Ratio $ in thousands 2014 2015 2016 2017 2018 2019 1Q20 2Q20 Net interest income (FTE) (GAAP)$ 209,319 $ 248,613 $ 308,002 $ 345,743 $ 402,426 $ 450,413 $ 108,316 $ 107,457 Total noninterest income (GAAP) 80,509 108,270 137,231 132,140 143,961 153,25
Slide 42: Reconciliation of Non-GAAP Disclosures: Non Interest Income
Reconciliation of Non-GAAP Disclosures Non Interest Income (adjusted) $ in thousands 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Actual non interest income (GAAP)$ 35,885 $ 41,960 $ 37,953 $ 37,456 $ 37,570 $ 64,170 Securities gains (losses) 13 (8) 343 - - 31 MSR valuation adjustment - - (3,132) 1,296 (9,571) (4,
Slide 43: Reconciliation of Non-GAAP Disclosures: Diluted Earnings Per Share
Reconciliation of Non-GAAP Disclosures Diluted Earnings Per Share $ in thousands 4Q19 1Q20 2Q20 Net income (GAAP)$ 38,415 $ 2,008 $ 20,130 MSR valuation adjustment (1,296) 9,571 4,951 COVID-19 related expenses** - 2,903 6,257 Tax effect of adjustment noted above 241 (3,467) (2,050) Net income with e
Slide 44: Reconciliation of Non-GAAP Disclosures: Return on Average Assets
Reconciliation of Non-GAAP Disclosures Return on Average Assets $ in thousands 2Q19 3Q19 4Q19 1Q20 2Q20 Net income (GAAP)$ 46,625 $ 37,446 $ 38,414 $ 2,008 $ 20,130 Income taxes 13,945 11,132 9,424 773 4,637 Provision for credit losses (including unfunded commitments) 900 1,700 2,950 29,750 29,500 M
Slide 45: Reconciliation of Non-GAAP Disclosures: Return on Average Tangible Equity
Reconciliation of Non-GAAP Disclosures Return on Average Tangible Equity $ in thousands 2Q19 3Q19 4Q19 1Q20 2Q20 Net income (GAAP)$ 46,625 $ 37,446 $ 38,414 $ 2,008 $ 20,130 Income taxes 13,945 11,132 9,424 773 4,637 Provision for credit losses (including unfunded commitments) 900 1,700 2,950 29,750
Slide 46: Investor Inquiries
Investor Inquiries C. Mitchell Waycaster President and Chief Executive Officer 209 TROY STREET TUPELO, MS 38804-4827 Kevin D. Chapman Senior Executive Vice President, PHONE: 1-800-680-1601 Chief Operating Officer FACSIMILE: 1-662-680-1234 WWW.RENASANT.COM James C. Mabry, IV WWW.RENASANTBANK.COM Seni