Renasant (NYSE:RNST) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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The full earnings call is available at https://event.choruscall.com/mediaframe/webcast.html?webcastid=SgFaqN4L
Summary
Renasant reported a strong financial performance for Q1 2026, with adjusted earnings per share increasing by 41% year over year to $0.93.
The company saw improvements in key financial metrics, including a rise in adjusted return on assets and return on tangible equity, and a significant reduction in the efficiency ratio.
Loans decreased by $71.8 million but deposits grew significantly by $626.4 million from the previous quarter.
Renasant achieved its merger cost savings goals and continues to focus on strategic hiring, having added 18 revenue producers in Q1.
The management reaffirmed a mid-single-digit growth outlook for both loan and deposit growth for the year, despite some challenges in loan growth during Q1.
Non-interest income saw a decline due to the absence of a one-time gain from the previous quarter, though SBA loan sales performed well.
The company plans to maintain its strong capital position, with CET1 ratio targets remaining around 11.25% by year-end, and continues to be active in stock buybacks.
Credit quality remained stable, with a focus on maintaining a strong allowance for loan and lease losses due to macroeconomic uncertainties.
Full Transcript
OPERATOR
Good morning and welcome to The Renaissance Corporation 2026 First Quarter Earnings Conference call and webcast. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing Star then zero on your telephone keypad. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on your telephone keypad. To withdraw your question, please press Star then two. Please note this event is being recorded. I would now like to turn the conference over to Kelly Hutchison, Executive Vice President and Chief Accounting Officer with Renaissance Corporation. Please go ahead.
Kelly Hutchison (Executive Vice President and Chief Accounting Officer)
Good morning and thank you for joining us for Renasant Corporation’s quarterly webcast and conference call. Participating in the call today are members of Renaissance Executive Management Team. Before we begin, please note that many of our comments during this call will be forward looking statements which involve risk and uncertainty. There are many factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward looking statements. Such factors include, but are not limited, changes in the mix and cost of our funding sources, interest rate fluctuation, regulatory changes, portfolio performance and other factors discussed in our recent filings with the securities and Exchange Commission, including our recently filed earnings release which has been posted to Our corporate site www.renasant.com under the Press Releases link under the News and Market Data tab. We undertake no obligation, and we specifically disclaim 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. In addition, some of the financial measures that we may discuss this morning are non GAAP financial measures. A reconciliation of the non GAAP measures to the most comparable GAAP measures can be found in our earnings release. And now I will turn the call over to our President and Chief Executive Officer Kevin Chapman.
Kevin Chapman (President and Chief Executive Officer)
Thank you Kelly and good morning. Two years ago, we challenged ourselves by setting aspirational goals to improve our financial performance. At that time, we targeted the first quarter of 2026 as a key measuring stick that would show the financial benefits of our work. Frankly, the strong results for the first quarter exceed our goals. Adjusted earnings per share were $0.93 in the first quarter, representing a 41% increase year over year. For the quarter, adjusted return on assets grew from 95 basis points in 2025 to 133 basis points in in 2026, our adjusted return on tangible equity grew from 10.3% to 16.3% and last of all, the efficiency ratio improved from 65.5% to 55.7%. I am extremely proud of our team’s accomplishments to remain customer centric while we went through our largest merger conversion and integration. As we move forward, the Renasant team is engaged and focused on the priorities for our company to continue to grow customer relationships and hiring talented bankers. I will now turn the call over to Jim to give more details on the financial results.
Jim
Thank you Kevin and good morning. Looking at the balance sheet loans were down $71.8 million on a linked quarter basis or 1.5%. Annualized deposits were up $626.4 million from the fourth quarter or 11.8%. Annualized reported net interest margin decreased 2 basis points to 3.87% while adjusted margin decreased 1 basis point to 3.61%. On a linked quarter basis, our adjusted total cost of deposits decreased 3 basis points to 1.94% while our adjusted loan yields decreased 7 basis points to 6.04%. From a capital standpoint, all regulatory capital ratios remain in excess of required minimums to be considered well capitalized. We record a credit loss provision on loans of $8.1 million comprised of $4.2 million for funded loans and $3.9 million for unfunded commitments. Net charge offs were $2.3 million and the ACL as a percentage of total loans increased 2 basis points quarter over quarter to 1.56%. Turning to the income statement, our adjusted pre provision net revenue was $118.3 million. Net interest income decreased $3.8 million quarter over quarter. Non interest income was $50.3 million in the first quarter, a linked quarter decrease of $0.9 million. The decline in non interest income is primarily related to the recognition in the fourth quarter of a one time gain of $2 million resulting from the exit of low income housing tax credit partnerships. The absence of this gain in the first quarter was partially offset by strong performance on SBA loan sales. Non interest expense was $155.3 million for the first quarter. Excluding merger and conversion expenses of $10.6 million in the fourth quarter, this is a linked quarter decrease of $4.9 million. I will now turn the call back over to Kevin.
Kevin Chapman (President and Chief Executive Officer)
Thank you, Jim. We believe that Renasant is uniquely positioned to capitalize on organic growth opportunities. We appreciate your interest in Renasant and look forward to further discussing our results with you this morning. I will now turn the call over to the operator for questions.
OPERATOR
Thank you. We will now begin the question and answer session to ask a Question, you may press star then one or two. Your telephone keypad. If you’re using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you’d like to withdraw your question, please Press Star Then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Michael Rose with Raymond James. Please go ahead.
Michael Rose (Equity Analyst)
Hey, good morning, guys. Thanks for taking my questions. Just wanted to start on expenses. Obviously a lot of hard work has been done on the cost savings from the merger. The step down was maybe a little bit better than I think you guys had talked about last quarter. Maybe Kevin, if you can just give us an update on where the merger cost savings stand. I would assume that you’ve got most of them at this point, but wanted to see if there’s anything left. Maybe you can also talk about kind of the reduction in employee headcount that you’ve had. And if we can kind of assume that there’d be a little bit of growth off of this $155 million rate that we saw in the first quarter. Just trying to get kind of a near term outlook.
Jim
Thanks, Michael. It’s Jim. I’ll start and I’m sure Kevin will add some color. But we’re really pleased with what’s happened in that line item. I mean, we, it’s been a focus, as you know, for the company for a number of years and we started to see the, you know, real progress beginning, call it 18 months ago even before we started to see the benefits from the merger. With the first, we could see it start to bend down. So that’s been a focus and remains a focus in terms of where we go from here. I mean, as you point out, we hit our goals with respect to expense saves from the first. So very pleased with that. I don’t see a lot of savings associated with the merger from this point on. I think we’ve realized most of those expense saves. That’s not to say that we can’t do more just as a company as a whole. But I think expenses that are expense saves that are truly related to the merger are pretty much in this run rate. Looking forward there, I guess there are a couple things. We will have merit increases obviously in the second quarter and there’s a day count factor as we look to Q2 and beyond, but I think so I think we do have those things which will cause expenses to drift up moderately. The other variable, and this is probably something Kevin should speak to, but is we have seen and are seeing opportunities to hire. As you know, there’s a lot of dislocation going on in the marketplace. And so we have seen, we’ve seen that already and expect to see more of it. I would say that’s the part of the picture on NIE that’ll be a little hard to predict. And Kevin, please add to that.
Kevin Chapman (President and Chief Executive Officer)
Yeah, I will. Thank you. Jim and Michael, good morning. I’ll just add you mentioned about the headcount. So if you go back to June of 24, which we announced the merger with the first in July, but if you look at just our combined FTEs, we were just shy of 3400 employees. If you just take us plus them, that’s what our FTEs were at 331, that number will be about 2950. So we’ve carved out 420 employees over that time period. Not all of them were due to to the cost saves of the merger. Prior to that, Renasant was highly focused on accountability and ensuring that we had the right team for what we wanted the goals to be. So I agree with Jim that our cost save number we’ve achieved. But the accountability measures and the requirements to be higher performing at Renaissance haven’t changed. And so we’ll continue to focus on that. Find incremental ways to improve cost costs, to reallocate expenses to higher performing endeavors. That effort will not change. But that didn’t occur because of the first. That was happening long before that. Jim also mentioned the new hires. I think one thing that is hidden in the focus on expenses that we’ve had over the past couple of quarters is the hiring we’ve been doing, the cost saves and the expenses fences where they land today. That includes new hires that we’ve been making along all along the past several quarters. In Q1 we hired 18 revenue producers. In Q4 we hired six. And in Q3 of last year we hired nine. So if you look at the real cost saves associated with the merger, associated with accountability measures, it’s much deeper than optically what we’re showing in the numbers. But we’re extremely excited about the hiring, the hiring opportunities we have, the market dislocation that is giving us the opportunity to have conversations with extremely talented bankers all throughout the Southeast. And I think we’ve said it in the past, you know, we kind of grade out, you grade out your employees A, B, C, D and F. I think we’ve said this, that we will always hire a rated talent when they’re available. And maybe I’ll say it a Little bit more pointedly, we won’t flinch at the opportunity to hire a rated talent and we’re seeing that opportunity all around us right now.
Michael Rose (Equity Analyst)
That’s great, Kevin. So I’m not trying to pin you down, but just as a starting point, it sounds like with the puts and takes, maybe a couple million dollars higher in the second quarter is what we could expect or is that fair? Just trying to better appreciate kind of a starting run rate. With the seasonality aspect,
Jim
I would say this, that, you know, from Q1, probably a low single digit percent increase and that factors in some of the hiring Kevin’s talking about. But that’s the variable that’s hard to predict because as Kevin points out, we see opportunities to be, you know, opportunistic and we intend to pursue those. So that’s the piece that Michael’s a little tough to, to forecast, but at its base, I would give you that that day count and merit, you know, is probably call it, I don’t know, low single digits. And then we’ll see what comes from the hiring, which will add to that.
Michael …
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