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Nov. 5, 2021, 3:55 p.m. EDT

10-Q: RENASANT CORP

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(EDGAR Online via COMTEX) -- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In Thousands, Except Share Data) This Form 10-Q may contain or incorporate by reference statements regarding Renasant Corporation (referred to herein as the "Company", "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 Exchange Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words "believes," "expects," "projects," "anticipates," "intends," "estimates," "plans," "potential," "possible," "may increase," "may fluctuate," "will likely result," and similar expressions, or future or conditional verbs such as "will," "should," "would" and "could," are generally forward-looking in nature and not historical facts. Forward-looking statements include information about the Company's future financial performance, business strategy, projected plans and objectives and are based on the current beliefs and expectations of management. The Company's management believes these forward-looking statements are reasonable, but they are all inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond the Company's control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements, and such differences may be material. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and, accordingly, investors should not place undue reliance on these forward-looking statements, which speak only as of the date they are made. Important factors currently known to management that could cause our actual results to differ materially from those in forward-looking statements include the following: (i) the continued impact of the COVID-19 pandemic and related governmental response measures on the U.S. economy and the economies of the markets in which we operate; (ii) the Company's ability to efficiently integrate acquisitions into its operations, retain the customers of these businesses, grow the acquired operations and realize the cost savings expected from an acquisition to the extent and in the timeframe anticipated by management; (iii) the effect of economic conditions and interest rates on a national, regional or international basis; (iv) timing and success of the implementation of changes in operations to achieve enhanced earnings or effect cost savings; (v) competitive pressures in the consumer finance, commercial finance, insurance, financial services, asset management, retail banking, mortgage lending and auto lending industries; (vi) the financial resources of, and products available from, competitors; (vii) changes in laws and regulations as well as changes in accounting standards; (viii) changes in policy by regulatory agencies; (ix) changes in the securities and foreign exchange markets; (x) the Company's potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth; (xi) changes in the quality or composition of the Company's loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers; (xii) an insufficient allowance for credit losses as a result of inaccurate assumptions; (xiii) general economic, market or business conditions, including the impact of inflation; (xiv) changes in demand for loan products and financial services; (xv) concentration of credit exposure; (xvi) changes or the lack of changes in interest rates, yield curves and interest rate spread relationships; (xvii) increased cybersecurity risk, including potential network breaches, business disruptions or financial losses; (xviii) civil unrest, natural disasters, epidemics and other catastrophic events in the Company's geographic area; (xix) the impact, extent and timing of technological changes; and (xx) other circumstances, many of which are beyond management's control. Management believes that the assumptions underlying the Company's forward-looking statements are reasonable, but any of the assumptions could prove to be inaccurate.

The Company undertakes no obligation, and specifically disclaims any obligation, to update or revise forward-looking statements, whether as a result of new information or to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by federal securities laws.

Financial Condition







                                                                  September 30, 2021                                         December 31, 2020
                                                                                  Percentage of                                             Percentage of
                                                        Balance                     Portfolio                     Balance                     Portfolio
        U.S. Treasury securities                  $           3,024                           0.12  %       $           7,079                           0.53  %
        Obligations of other U.S. Government
        agencies and corporations                                 -                              -                      1,009                           0.08
        Obligations of states and political
        subdivisions                                        378,981                          14.89                    305,201                          22.72
        Mortgage-backed securities                        2,108,671                          82.87                    955,549                          71.12
        Trust preferred securities                                -                              -                      9,012                           0.67
        Other debt securities                                53,967                           2.12                     65,607                           4.88
                                                  $       2,544,643                         100.00  %       $       1,343,457                         100.00  %
        


During the nine months ended September 30, 2021, we deployed a portion of our excess liquidity into the securities portfolio and purchased $1,743,105 in investment securities. Mortgage-backed securities and collateralized mortgage obligations ("CMOs"), in the aggregate, comprised approximately 94% of these purchases. CMOs are included in the "Mortgage-backed securities" line item in the above table. The mortgage-backed securities and CMOs held in our investment portfolio are primarily issued by government sponsored entities. Obligations of state and political subdivisions comprised approximately 6% of purchases made during the first nine months of 2021.







                                                                                                    September 30, 2021
                                                                                                                     Total              Percentage of
                                                                     Non Purchased           Purchased               Loans               Total Loans
        Commercial, financial, agricultural (1)                    $    1,321,569          $   114,450          $  1,436,019                    14.34  %
        Lease financing, net of unearned income                            79,215                    -                79,215                     0.79
        Real estate - construction:
        Residential                                                       306,537                1,288               307,825                     3.07
        Commercial                                                        779,766                3,705               783,471                     7.82
        Total real estate - construction                                1,086,303                4,993             1,091,296                    10.89
        Real estate - 1-4 family mortgage:
        Primary                                                         1,657,195              150,944             1,808,139                    18.05
        Home equity                                                       424,860               56,692               481,552                     4.81
        Rental/investment                                                 268,609               22,507               291,116                     2.91
        Land development                                                  133,732               10,204               143,936                     1.44
        Total real estate - 1-4 family mortgage                         2,484,396              240,347             2,724,743                    27.21
        Real estate - commercial mortgage:
        Owner-occupied                                                  1,365,288              264,939             1,630,227                    16.27
        Non-owner occupied                                              2,323,135              456,102             2,779,237                    27.74
        Land development                                                  106,475               19,791               126,266                     1.26
        Total real estate - commercial mortgage                         3,794,898              740,832             4,535,730                    45.27
        Installment loans to individuals                                  109,499               40,322               149,821                     1.50
        Total loans, net of unearned income                        $    8,875,880          $ 1,140,944          $ 10,016,824                   100.00  %
        


(1)Includes Paycheck Protection Program ("PPP") loans of $67,462 as of September 30, 2021.







                                                                                                     December 31, 2020
                                                                                                                     Total              Percentage of
                                                                     Non Purchased           Purchased               Loans               Total Loans
        Commercial, financial, agricultural (1)                    $    2,360,471          $   176,513          $  2,536,984                    23.20  %
        Lease financing, net of unearned income                            75,862                    -                75,862                     0.69
        Real estate - construction:
        Residential                                                       243,814                2,859               246,673                     2.26
        Commercial                                                        583,338               28,093               611,431                     5.59
        Total real estate - construction                                  827,152               30,952               858,104                     7.85
        Real estate - 1-4 family mortgage:
        Primary                                                         1,536,181              214,770             1,750,951                    16.02
        Home equity                                                       432,768               80,392               513,160                     4.69
        Rental/investment                                                 264,436               31,928               296,364                     2.71
        Land development                                                  123,179               14,654               137,833                     1.26
        Total real estate - 1-4 family mortgage                         2,356,564              341,744             2,698,308                    24.68
        Real estate - commercial mortgage:
        Owner-occupied                                                  1,334,765              323,041             1,657,806                    15.16
        Non-owner occupied                                              2,194,739              552,728             2,747,467                    25.13
        Land development                                                  120,125               29,454               149,579                     1.37
        Total real estate - commercial mortgage                         3,649,629              905,223             4,554,852                    41.66
        Installment loans to individuals                                  149,862               59,675               209,537                     1.92
        Total loans, net of unearned income                        $    9,419,540          $ 1,514,107          $ 10,933,647                   100.00  %
        


(1)Includes PPP loans of $1,128,703 as of December 31, 2020. Table of Contents







                                                September 30, 2021       December 31, 2020
              Security repurchase agreements   $            11,253      $           10,947
              Federal funds purchased                            -                  10,393
                                               $            11,253      $           21,340
        


At September 30, 2021, long-term debt consists of long-term FHLB advances, our junior subordinated debentures and our subordinated notes. The following table presents our long-term debt by type as of the dates presented:







                                          September 30, 2021      December 31, 2020
        Long-term FHLB advances          $          150,425      $          152,167
        Junior subordinated debentures              111,228                 110,794
        Subordinated notes                          207,210                 212,009
                                         $          468,863      $          474,970
        


Long-term funds obtained from the FHLB are used to match-fund fixed rate loans in order to minimize interest rate risk and to meet day-to-day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits. At September 30, 2021, there were no outstanding long-term FHLB advances scheduled to Table of Contents

Results of Operations







                                                                                              Three Months Ended
                                                                   September 30, 2021                                 September 30, 2020
                                                                                    Impact to                                             Impact to
                                                         Pre-tax     After-tax     Diluted EPS              Pre-tax        After-tax     Diluted EPS
        Debt prepayment penalty                        $       -    $       -    $           -          $     28         $       22    $           -
        MSR valuation adjustment                               -            -                -              (828)              (650)           (0.01)
        COVID-19 related expenses                            323          253                -               570                448             0.01
                                                                                              Nine Months Ended
                                                                   September 30, 2021                                 September 30, 2020
                                                                                    Impact to                                             Impact to
                                                         Pre-tax     After-tax     Diluted EPS              Pre-tax        After-tax     Diluted EPS
        Debt prepayment penalties                      $       -    $       -    $           -          $    118         $       94    $           -
        MSR valuation adjustment                         (13,561)     (10,564)           (0.19)           13,694             10,916             0.19
        Restructuring charges                                307          239                -                 -                  -                -
        COVID-19 related expenses                          1,478        1,151             0.02             9,730              7,758             0.14
        


Net Interest Income







                                                                                              Three Months Ended September 30,
                                                                             2021                                                          2020
        . . .
        


Nov 05, 2021

COMTEX_396398367/2041/2021-11-05T15:55:09

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