Renasant Corporation : Announces Dividend Increase And Earnings For The First Quarter Of 2018

TUPELO, Miss., April 24, 2018 /PRNewswire/ -- Renasant Corporation (NASDAQ: RNST) (the "Company") today announced earnings results for the first quarter of 2018. Net income for the first quarter of 2018 was approximately $33.8 million, as compared to $24.0 million for the first quarter of 2017. Basic and diluted earnings per share ("EPS") were $0.69 and $0.68, respectively, for the first quarter of 2018, as compared to basic and diluted EPS of $0.54 for the first quarter of 2017.

On April 24, 2018, the Board of Directors of the Company declared a quarterly cash dividend of $0.20 per share to be paid June 30, 2018, to shareholders of record as of June 16, 2018.  The per share dividend represents a $0.01 increase from the dividend paid in the previous quarter and the third increase to the Company's quarterly dividend since March 31, 2016.

On March 28, 2018, the Company and Brand Group Holdings, Inc. ("Brand"), the parent company of The Brand Banking Company, jointly announced the signing of a definitive merger agreement pursuant to which the Company will acquire Brand for a combination of cash and Renasant common stock. Brand operates 13 locations throughout the greater Atlanta market. As of December 31, 2017, Brand had approximately $2.4 billion in total assets, which included approximately $1.9 billion in total loans (excluding mortgage loans held for sale), and approximately $1.9 billion in total deposits.

Impact from Infrequent or Nonrecurring Items
The Company incurred expenses and charges in connection with certain transactions that are considered to be infrequent or non-recurring in nature. The following table presents the impact of these charges on reported earnings for the dates presented (in thousands):

"Renasant opened the year with very strong results.  Our continued focus on profitability in this competitive interest rate environment coupled with our strategies around expense containment were the driving factors behind our record earnings for the quarter," commented Renasant Chairman and Chief Executive Officer, E. Robinson McGraw. "We're also excited to announce an increase in our quarterly dividend, effective in the second quarter of 2018. This increase represents the third dividend increase in the last eight quarters and boosts our annual cash dividend from $0.76 to $0.80. It is also my pleasure to announce that, effective May 1, 2018, our Board of Directors has elected Mitch Waycaster as Chief Executive Officer of both Renasant Corporation and Renasant Bank and Kevin Chapman as Chief Operating Officer, in addition to his role as Chief Financial Officer, of both Renasant Corporation and Renasant Bank."

C. Mitchell Waycaster added, "Our strong results for the first quarter of 2018 demonstrate that Renasant is positioned well for a successful year. Furthermore, we believe our proposed merger with Brand, which we currently expect to complete in the third quarter of 2018, will bolster our prospects as we team with an experienced group of management and expand our presence and offerings in the Atlanta metro area. Finally, as Robin transitions into his new role as Executive Chairman of the Company, the entire Renasant family thanks him for his honorable dedication to Renasant and exemplary leadership as the Company grew from $1.2 billion in assets to $10.2 billion in assets under his oversight as CEO. We look to capitalize on this legacy and enjoy continued success into the future."

Profitability Metrics
The following table presents the Company's profitability metrics for the three months ended March 31, 2018, including and excluding the impact of after-tax merger and conversion expenses, which are non-recurring in nature:

Return on average tangible assets and return on average tangible equity are non-GAAP financial measures. A reconciliation of these financial measures from GAAP to non-GAAP is included in the table at the end of this release.

Other financial highlights from the first quarter of 2018 include the following:

• Total assets were $10.2 billion at March 31, 2018, as compared to $9.8 billion at December 31, 2017.
  
  
• Total loans increased to $7.7 billion at March 31, 2018, from $7.6 billion at December 31, 2017, which represents an annual linked quarter growth rate of 4.14%. Loans not purchased were $5.8 billion at March 31, 2018, as compared to $5.6 billion at December 31, 2017.The following table reconciles the reported loan yield to the adjusted loan yield excluding the impact from interest income collected on problem loans and purchase accounting adjustments on purchased loans for the periods presented (in thousands):

• Total deposits increased to $8.4 billion at March 31, 2018, from $7.9 billion at December 31, 2017. For the first quarter of 2018, the cost of total deposits was 40 basis points, as compared to 36 basis points for the fourth quarter of 2017 and 29 basis points for the first quarter of 2017. The following table presents the mix and cost of all funding sources for the first quarter of 2018 as compared to the fourth quarter of 2018 and the first quarter of 2017.

• Net interest income was $89.2 million for the first quarter of 2018, as compared to $93.3 million for the fourth quarter of 2017 and $74.0 million for the first quarter of 2017. Net interest margin was 4.20% for the first quarter of 2018, as compared to 4.25% for the fourth quarter of 2017 and 4.01% for the first quarter of 2017. The following table reconciles reported net interest margin to adjusted net interest margin excluding the impact from interest income collected on problem loans and purchase accounting adjustments on purchased loans for the periods presented (in thousands):

• Noninterest income for the first quarter of 2018 was $34.0 million, as compared to $32.4 million for the fourth quarter of 2017 and $32.0 million for the first quarter of 2017. The addition of Metropolitan, coupled with growth in fee income on legacy Renasant loan and deposit products, contributed to the growth in service charges on deposits and fees and commissions on loans and deposits for the first quarter of 2018 as compared to the same period in 2017. Mortgage banking income for the first quarter of 2018 was $11.0 million, compared to $9.9 million for the fourth quarter of 2017 and $10.5 million for the first quarter of 2017.
  
  
• Noninterest expense was $77.9 million for the first quarter of 2018, as compared to $76.8 million for the fourth quarter of 2017 and $69.3 million for the first quarter of 2017. The impact from the addition of the Metropolitan operations has been slightly offset by expense containment efforts through contract renegotiations.

Asset Quality Metrics
Total nonperforming assets were $37.5 million at March 31, 2018, a decrease of $1.9 million from December 31, 2017, and consisted of $22.9 million in nonperforming loans (loans 90 days or more past due and nonaccrual loans) and $14.6 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 $9.9 million and $9.8 million, respectively, at March 31, 2018, as compared to $10.2 million and $11.5 million, respectively, at December 31, 2017. 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.

• Excluding purchased loans, nonperforming loans decreased to $13.0 million, or 0.22% of total loans, at March 31, 2018, from $13.3 million, or 0.24% of total loans, at December 31, 2017. Early stage delinquencies, or loans 30-to-89 days past due, as a percentage of total loans were 0.33% at March 31, 2018, as compared to 0.30% at December 31, 2017.
  
  
• Excluding purchased OREO, OREO was $4.8 million at March 31, 2018, as compared to $4.4 million at December 31, 2017. OREO sales totaled $677 thousand in the first quarter of 2018.
  
  
• The allowance for loan losses was 0.60% of total loans at March 31, 2018, as compared to 0.61% at December 31, 2017. The allowance for loan losses was 0.80% of non-purchased loans at March 31, 2018, as compared to 0.83% at December 31, 2017.   
  
  
• Net loan charge-offs were $1.6 million, or 0.08% on an annualized basis of average total loans, for the first quarter of 2018, as compared to $470 thousand, or 0.02% on an annualized basis of average total loans, for the fourth quarter of 2017 and $1.3 million, or 0.09% on an annualized basis of average total loans, for the first quarter of 2017.
  
  
• The provision for loan losses was $1.8 million for the first quarter of 2018, as compared to $2.2 million for the fourth quarter of 2017 and $1.5 million for the first quarter of 2017.

Capital Ratios

• At March 31, 2018, Tier 1 leverage capital ratio was 10.61%, Common Equity Tier 1 ratio was 11.38%, Tier 1 risk-based capital ratio was 12.41%, and total risk-based capital ratio was 14.44%. All regulatory ratios exceed the minimums required to be considered "well-capitalized."
  
  
• Tangible common equity ratio was 9.36% at March 31, 2018, as compared to 9.56% at December 31, 2017.

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 25, 2018.

The webcast can be accessed through Renasant's investor relations website at www.renasant.com or https://services.choruscall.com/links/rnst180425.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 10119302 or by dialing 1-412-317-0088 internationally and entering the same conference number. Telephone replay access is available until May 9, 2018.

ABOUT RENASANT CORPORATION:
Renasant Corporation is the parent of Renasant Bank, a 114-year-old financial services institution. Renasant has assets of approximately $10.2 billion and operates more than 180 banking, mortgage, wealth management 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," "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. Certain non-GAAP financial measures that the Company uses exclude purchase accounting adjustments and interest income collected (foregone) on problem loans from loan interest income and net interest income when calculating the Company's taxable equivalent loan yields and net interest margin, respectively. The most directly comparable GAAP financial measure is presented with these non-GAAP measures. The Company's management uses these non-GAAP financial measures to evaluate ongoing operating results and to assess ongoing profitability.

Certain other non-GAAP financial measures (namely, 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) adjust GAAP financial measures to exclude intangible assets and certain charges that the Company considers to be non-recurring in nature. 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 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, and non-recurring charges 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.