Renasant Corporation (RNST) Q2 2026 Earnings Report, Transcript and Summary

Good day, and welcome to Renasant Corporation's 2026 Second Quarter Earnings Conference Call and Webcast. All participants will be in a listen-only mode for the duration of the call. And should you need any assistance today, please signal the conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Kelly Hutcheson, executive vice president and chief accounting officer. Please go ahead.

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 Renasant's 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 results or other expectations expressed in the forward-looking statements. Such factors include, but are not limited to, 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, at 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.

Thank you, Kelly, and good morning. Our performance in the second quarter continued at the pace we set in the first quarter. Operating results across the company were strong, as we continue to focus on organic growth, as well as disruption in many of our markets. Adjusted earnings per share in the second quarter were $0.94, up 36% from a year ago. Adjusted return on average assets was 1.3%, compared to 1.01% in the same period last year. Similarly, adjusted return on average tangible common equity was 16.25% versus 13.5% in the second quarter of 2025. The efficiency ratio also improved from 67.6% a year ago to 57.9% this quarter. Focusing on increasing core banking relationships, and adding talent, throughout the company, Renasant is in a great position to capitalize on growth opportunities throughout the back half of the year. I will now turn the call over to Jim to provide more details on our financial results.

Thank you, Kevin, and good morning. Looking at the balance sheet, loans were up $221 million on a linked quarter basis or 4.7% annualized. Deposits were down $398 million from the first quarter or 7.2% annualized, primarily due to seasonal outflows of public fund deposits. Reported net interest margin decreased 4 basis points to 3.83% while adjusted margin remained flat at 3.61%. Our adjusted total cost of deposits increased by 2 basis points to 1.96%, while our adjusted loan yields decreased 1 basis point to 6.03%. 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 $3.8 million comprised of $1.2 million for funded loans and $2.6 million for unfunded commitments. Net charge-offs were $2.8 million. And the ACL, as a percentage of total loans declined 2 basis points quarter-over-quarter to 1.54%. Turning to the income statement, our pre-provision net revenue was $112 million. Net interest income was $228 million, a decrease of $800,000 quarter-over-quarter. Noninterest income was $51.2 million in the second quarter, a linked quarter increase of $900,000 Noninterest expense was $162 million for the second quarter, a linked quarter increase of $6.2 million, mostly driven by deferred compensation accruals tied to market valuations higher health insurance claims, and annual merit increases. We look forward to the second half of 2026. I will now turn the call back over to Kevin.

Thank you, Jim. We believe that Renasant is in a great position to continue to improve on its high levels of performance. We appreciate your interest in Renasant and look forward to discussing our results with you. I will now turn the call over to the operator for questions.

We will now begin the question-and-answer session. At this time, we will pause just momentarily to assemble our roster. And our first question here will come from Michael Rose with Raymond James. Please go ahead.

Hey, good morning, guys. Thanks for taking my questions. Wanted to start on loan growth. Obviously, really good production this quarter. Can you just talk about the expectations as we think about the back half of the year? It looks like if I either include or exclude Republic, you guys were a little short of my expectations and consensus and just want to get a sense for production levels from here, scheduled payoffs, and what you would expect out of Republic business as we move forward? Thanks.

Yeah. Hey, Michael. Good morning. It is Kevin. So if you broke down several of the components of the growth, we were pleased with the uptick in production that we had in Q2. As you noted, that was offset by some headwinds and payoffs. And still think payoffs are going to continue to be something we have to overcome. But as we look at our pipeline, as we look at our efforts, we look at our conversations with customers, production is ramping, and it is ramping and it is ramping in the fact that our pipeline, if we look at our pipeline today, it is up about 6% to 10% from where it was at the beginning of Q2. So we are seeing where we have guided to that mid-single-digit growth number. We are seeing that fully in scope and fully in range. As we get into Q3 and into the back half of the year.

Very helpful, Kevin. And then maybe one for Jim on expenses. Expenses were maybe a little bit higher than, I think, what I was looking for. But any change to the trajectory that you guys had kind of previously talked about And maybe if you can just balance some of the investments that you guys are making in both people and technology along with other cost-saving opportunities that you guys may have? Thanks.

Sure. Good morning, Michael. So yes, we had a couple of one-time or non-recurring items in the expense bucket And when we look at our sort of core expense run-rate, we feel really good with where it is. And, again, of course, we cannot I mean, these are obviously the results of the results, but we the underlying trends and expenses we feel is good. And I would say our outlook from here is that what we saw in Q1 in terms of expenses probably will moderate downward a little bit in Q3 and sort of be steady for the balance of the year. And that does reflect as you talked about, investments we are making in people and we continue to make those investments in people. And the guidance that I am sharing in terms of that trajectory allows for some of that. If we are more successful than we think in terms of some of those hires, then that might change a little bit. But I think the core NIE run rate will, again, come down a little bit and then remain steady for the balance of the year.

Very helpful. I will step back. Thanks for taking my questions, guys.

Michael, I may just add before you hop off to that. Jim talked about the new hires and we have talked about our activity in new hires. that we have had going back to Q3 of last year. So just to remind you, in Q1, we had 18 new revenue-producing new hires. In Q2, that number was five; we added five. And so far in Q3, we have added 7. And so we have talked about the opportunities that we have had in the markets to hire talent. We continue to execute on that. And we will continue to look for opportunities to add and augment to our team. And those hires as well as the activity that we have in our market from our existing team is showing up in results. But, Michael, you talked about the loan growth. We talked about the headwinds from the payoffs. The production, the activity is offsetting the headwinds. I will just give you a data point. what we are seeing so far in Q3. We have seen elevated payoffs in Q3, but production is outpacing that. And right now, we are up net loans about $40 million and that is on elevated payoffs. So our teams are continuing to focus on taking market share, serving customers, and that continues to show up in the numbers even as we get into Q3.

Appreciate all that color, Kevin. Thanks again. I will step back.

And our next question will come from Catherine Mealor with KBW. Please go ahead.

Thanks. Good morning.

Good morning, Catherine.

Moving to the other side of the balance sheet, know some of the outflows in deposits were seasonal this quarter with public funds. Can you give us any update on what you are seeing on your core underlying deposit trends and expectations for deposit growth in the second half of the year? James Mabry: Catherine, this is Jim. Maybe I will start. Go ahead, Kevin.

No. Jim, you go ahead.

So a couple of things, I know Kevin can add some really good color, Catherine, as it relates to some recent trends. But yes, as you noted, seasonal outflows in public funds were really the driver in terms of the change from Q1 to Q2. And as you probablyy recall from prior quarters with us, we will start to see that those flows reverse here in the second half. And so as opposed to being a headwind, those inflows will be a tailwind. And then I guess most importantly and really probably to the main point of your question, the underlying performance in core deposits, we are very encouraged about. And so not only do we expect to see the public fund trend shift, but I think the underlying trends in core deposits are also strong. And Kevin, you may want to pick up on that.

So Catherine, I think if you go back to this call in Q1 back in April, we shared some of the numbers we had seen at that time about new account openings. And we were interested and excited to see how that would play out through the remainder of the quarter. So just kind of refresh you on what we achieved as far as core deposit growth, kind of looking through that public fund noise. Just core deposit growth and new account openings that we had in Q2, new account openings, new customers to the bank, did not have an existing account with us, did not have existing dollars with us. We opened up over 10,000 new accounts in Q2. And that equates to roughly $380 million in new deposits. If you break that down, about half of it was CDs, which means the other half was checking accounts. And we believe those checking accounts are sticky core deposits that we did not go and get because of rate. We got through the relationship. And that is also commercial accounts as well as consumer accounts. As we look at that activity into Q3, that activity has not slowed down just through July. We have opened up over 2,000 net new accounts. And that represents $86 million in new fundings. And some of these accounts, I do not think all the money has moved into yet. We think that those accounts are still being funded. Activity and reassigning deposits or bill pay. All of that activity is still going on. And we expect to continue to see deposits build into some of these accounts as we get into Q3 and Q4.

Great. And then how about the rate on new deposit growth? I assume we saw a couple of basis points increase in deposit costs this quarter. These are especially maybe the CD piece is coming on with a little bit of a higher rate. Curious maybe where that ended the quarter and maybe the public funds might kind of mess that up before looking at an exit run-rate. But curious what you are thinking about deposit cost increases in the next couple of quarters?

So, our deposit. Catherine, go ahead, Kevin.

Yes. Our deposits are coming in at market rates. We do not have a special out there. We are not paying above average to get them. I think the weighted average rate of those new accounts are going to be in the high twos and low threes.

That is great. Great. Thank you.

And our question will come from Matt Olney with Stephens. Please go ahead.

Thanks. Good morning. Appreciate taking my question. I want to go back to loan growth discussion and the loan production sounds great. Any more color on loan pricing competition? I think when we talked in April, you highlighted just increasing pressure back then. So I am curious, any update since that April timeframe? Thanks.

Jim, you want to talk about new and renewed?

Sure. So the you know, as you recall, you were talking about April, I mean, the pressures that were present then are still there. it is very competitive on both sides. And on the loan side, I think in terms of new and renewed, we are generally looking in the low sixes, Matt. And so you know, there is certainly, a lot of competitive pressures there, and it varies by region. And we are seeing it in certain markets and maybe not so much in others. And the same thing on the deposit side. You saw our costs inch up a bit on deposits and we do have some tailwinds that will help us in terms of NIM. But, yes, those pressures remain as they were back in April.

Okay. Appreciate that, Jim.

And then I guess as a follow-up, just thinking more about interest rate sensitivity, if the Fed funds rate were to move up this week or in September. Would love to know kind of what your thoughts are as far as the balance sheet and overall impact to higher Fed funds rate? Thanks.

I would say that as it relates to profitability side of that and margin, we do not in our outlook, we are not budgeting or planning on any cut or increase. as we sit here today. And generally, I would say that, you know, a few base you know, 25 basis points here, that is not going to make a big difference in our outlook in terms of the profitability impact. And I would say that is that is generally true on the balance sheet in terms of dollars. So absent a more meaningful change in rates I do not see it having a major impact on the balance sheet or the income statement.

Okay. Thanks, guys.

Thank you, Matt.

And our next question will come from David Bishop with Hovde Group. Please go ahead.

Hey, good morning, gentlemen.

Good morning, David.

Since Matt sort of opened the door, in terms of the discussion, just curious, is the bias for stability still here? Or maybe I think you mentioned maybe some tailwinds on the deposit side. See a little bit of bias? I am just curious, how you are thinking about the margin.

Sure. As we sort of discussed and answered Matt's question, our outlook is that generally it is going to be fairly stable for the second half. We have got certainly deposit pricing pressures, but on the I would say, the asset side, we have got a couple of things working for us. As you probably noted, I mean, most of our loan growth in the quarter came at the very end of the quarter. So there is a significant difference between average balances and period end balances for us, and that will be a nice tailwind going to Q3. The other thing is we have got roughly $1.2 billion in loans that mature over the next 12 months and the rate on that is about 4.95. So that will be another tailwind that will benefit and help offset deposit pricing pressures. And then lastly, not as significant, but still meaningful. We have got $50 million to $60 million a month rolling off the securities book. And that is coming off at the low threes, David, and coming back on the upper fours or close to 5%. So we feel good about the outlook of a stable margin, the core stable margin here in the back half.

Great. Appreciate that color. And then maybe Kevin or Jim, you talked about the paydowns and the payoff headwind continuing. Just curious, if you could sort of ring-fence maybe what vintages those are coming from and you know, from a snake through the tunnel perspective, do you think you are in the seventh or eighth inning or still sort of midway through? Just curious how you sort of view the paydown pipeline.

Kevin? Yes. So Dave, just what we are seeing in what has been communicated to us, it is largely coming in some commercial real estate, some asset classes. there has been an above average payoff in some multifamily and some office space. It is also largely coming from the sale of the assets or in some cases the sale of the business. As we get into Q3, we have seen some early payoffs in our C&I book and it is really the sale of the underlying business. So it is not as if we are losing any of these loans to competition, we are just seeing our borrowers are making decisions to sell collateral, to liquidate collateral and as they look at redeploying that liquidity, we expect to get first shot at any future opportunity. But largely this is coming in the commercial, the payoffs are coming in commercial real estate and we somewhat anticipated this as rates kind of bottomed out in Q1 that we thought we would see some elevated payoffs as the 10-year has increased, we think some of those pressures on the payoffs in commercial real estate subside a little bit in the short run or long run depending on where the 10-year goes. So we are expecting some easing on the payoffs, but again it can be very lumpy at the same time as our customers make decisions about the underlying collateral. As far as throughout the book, we are not seeing outside of it being commercial real estate, we are not seeing it being concentrated in a certain market or, you know, it is runoff from it is not runoff from the first book, it is really just broad-based and we are seeing it more mainly in the asset class of commercial real estate.

Got it. One final question. Kevin, you noted the strong deposit account openings. Just curious if any of that you can sort of point to coming from some of the merger disruption that is, you know, been undergone within your footprint?

So it is a handful of things, but market disruption is one of those main underliers. I mean, David, we have had a focus on deposits going back to 2023, that we wanted to continue to maintain a moderate loan-to-deposit ratio in that mid-80% range. So we have had a heightened focus on deposits. And then market opportunity allowed by market disruption just allowed us to lean into that focus. And I mean, look. Our teams just look at the numbers. Our teams responded to the opportunity in the market. And we do not think that opportunity is abating at the moment. We still think there is a lot of disruption. And a lot of opportunity. And again, we may have mentioned this in the past, but we think it is we think the fact that we are stable, we are not doing a major merger, we are not going through a transformational integration, we are not reorganizing the company. All of those play well to where we can just be stable and focus on client needs. And our teams know who their credit person is. They know who to go to. They know they have got good support in the back office. and that they will show well in front of a customer that has uncertainty or may be unhappy where they currently are.

Perfect. Appreciate the color.

Thank you, David.

And our next question will come from Janet Lee with TD Cowen. Please go ahead.

Morning. Not to be too nitpicky on the public fund seasonal outflows. When we look at in the third quarter, so should we expect any of those to come back to the bank in the third quarter or the fourth quarter? I get that you are getting a good traction on the core deposit growth side, but just wanted to see how your forecast pans out in the second half of 2026?

Janet, this is Jim. Good morning. I think our sense is that if you look at deposit growth in the second half, it is going to be I mean, both sides, we sort of target whether it is loans or deposits. That mid-single-digit growth rate number through the cycle, through the periods. And that outlook really has not changed. And so our expectation is that you are going to see you know, good deposit growth in the second half. And public funds will be relatively stable if not, you know, some inflows there.

Public fund deposits, can you give us what the cost there is relative to your average cost of deposits at 1.96%?

It would be somewhat higher, probably roughly 100 basis points higher, Janet.

Okay. Can you share with us the spot cost of deposits at the end of June?

James Mabry: For total cost of deposits, yes, total cost of deposit at end of June was 1.96%.

Oh, so the same as the average for the quarter?

That is correct.

Okay. And lastly, how should we think about could you give us a refresh on the Basel III proposal impact to your CET1. And is CET1 range or target beyond 2026?

So our expectation is it will reduce risk-weighted assets somewhere around $1 billion to $1.3 billion and that is call it, 55 to 65 basis points positive impact to CET1. And I think we have it at this point, budgeted that in or projected that in even though that seems like that is where things are going. But as to how we think about our sort of capital position going forward with that. I do not think it does not change how we look at sort of underlying capital goals. And as you know, we would like CET1 to be in the low 11s, and I do not think that will change. I do not think our outlook on that will change because of this change in the regulations. So what implications that is got for capital deployment, we will see, but I do not think it is going to change the way we think about our capital base and where we want it to be relative to the balance sheet.

Our next question here will come from Stephen Scouten with Piper Sandler. Please go ahead.

Yes. Maybe one follow-up first on just the trajectory. I think Jim, you said it could potentially go down a little bit into the third quarter. Is that some of the slight jump there in other noninterest expense driving some of that? And what was embedded within that increase quarter-over-quarter there in that line item?

Morning, Stephen. So there are a couple of things. Some merit was certainly which we contemplated as part of that increase. There was an increase associated with deferred comp expense and we do not expect that to be part of the second half, so that will be a benefit. And then health and life, you know, we are self-insured, and sometimes those claims will be higher than normal. And they were a little higher in Q2 than we anticipated. So that is why our outlook for the second half is for moderately lower expenses and still baking in, as Kevin's talked about, opportunistic hiring.

Okay. Great. And then, yeah, on the opportunistic hiring front, I think last quarter, Kevin, you had said, you know, look, there is some markets maybe where we do not feel like we could even have enough people. Any updates on geographically where you would look to add people and given all the dislocation kind of in your markets and even around your markets, would you look at moving towards Texas at all for LPOs or otherwise to take advantage of that disruption there?

Yeah. Stephen, primary focus is mainly building out in our existing footprint. And as it relates to a new market, I mean, that is all going to be facts and circumstances. There are a couple of markets where we may have a single location in a large market, and we need to build the infrastructure or continue our path or accelerate our path towards more relevance in some of those markets. I think that is going to be our focus primarily before we go open up a new market, specifically in the case like Texas. You know, there is a lot that we would need to learn about Texas. Great market, great state. Economically, it is outperforming any metric that you can throw at it. But also, I think looking at what it would take to be relevant in some of the markets in Texas, we would have to have significant scale to be relevant in a in a place like a Dallas or Houston or San Antonio. And so I think that as it relates to Texas being a primary focus, I would say that is not the case at the moment. We are going to focus more on our existing market and building out more scale, more infrastructure in our existing market. And I will also say not apologizing for our markets as well. The Southeast and the markets that we operate in those are very high-performing, high inbound migration, high median household income, high economic growth potential. So we feel like we have got ample opportunity in our existing footprint before we go launch and try to go to another market. And again, I think in some of those cases, we would have to go there in a substantial way to be able to be relevant in some of those markets.

Yeah. That makes sense. Appreciate that color. And then maybe just lastly, for me, curious if you could touch on just kind of lending competition from the standpoint of what you are seeing in terms of aggressiveness come from competitors around either rate structure or both? Kind of if there is a bigger tension point on one or the other, and if any of what you are seeing competitors do gives you maybe trepidation about the ability to hit the growth targets if things just get, you know, further down the risk curve than you would want to be?

Kevin, you or David? Stephen, this is David. Yep.

Stephen, this is David. So just we are seeing those pressures come across a variety of elements. We talked about and Jim talked about this morning the pricing pressures and those continue. Quarter over quarter. We are seeing other elements of pressure within our structure from competition. It could be anything from level of guarantor support on a transaction proceeds that we loan covenants. So it comes in various forms for our competitive sector, which is normal. As we progress through a competitive environment, it is going to go right, then it is going to go to terms. So we are starting to see that on terms. To your point about is that going to impact loan growth, we are going to continue to be disciplined just like we always have on our opportunities and it is with its customers that we know, markets that we know well, we have good institutional knowledge, both on the front line with the lenders as well as the credit side, the management side. We are going to lean into opportunities with well known customers to protect those relationships particularly we have got deposits at risk and so forth. We are going to protect those relationships If it is a new customer, something that we may not be as comfortable with, we may pull back and say we are going to continue to remain disciplined in our terms. It all comes back to that disciplined underwriting going to continue to drive our positive credit metrics. So it is a balance So, we are seeing the competition and we are just going to choose when we lean in and when we do not lean in.

Got it. Very helpful. Thank you very much for all the color there.

Yes. Hey, Stephen, Kevin. I will just add one last thing. To your point about the competition, do we think it causes us to relook at our guidance? Short answer is no. And in fact, our guidance is based off the competition. And we firmly believe that we are and should be a mid-single-digit grower, and that factors in what it takes to be competitive in our markets. And there is competition all around us for good loan growth. And we can be competitive in that. At some point though, when it comes to rate, there has to be a question, are we getting the proper returns off of the use of that capital? It may look good on the balance sheet that we are showing growth, but long-term, it may take us off track from our profitability goals. But as we look at the mid-single-digit, we think that allows us to get the proper returns at the proper rate with proper underwriting. It does not put pressure on our funding costs. Allows us to keep margins stable. All of that is baked into the math and the calculus behind being a single-digit grower. Long term. If we press on that, then it can cause we may have to change our outlook, maybe not on balance sheet growth, but on margin compression. or on profitability. At this time, we do not feel any need to do that. We think we can grow single-digit and hit all of our goals as it relates to increasing and improving profitability, maintaining a stable margin, not outgrowing our funding. All of that is why we come with the basis of the mid-single-digit growth.

And our next question is a follow-up from Matt Olney with Stephens. Please go ahead.

Hey, thanks guys. Just a few follow-ups here. On the fee side, I have not heard you guys talk much about the fees this morning. Looked a little bit softer than expectations. I think we typically have a kind of a nice seasonal pull-through in 2Q. Anything to call out there in 2Q or the outlook in the near-term?

Matt, this is Jim. So I think a couple of things. If you break down the fee income we had really good SBA numbers in the first half. I do think, I mean, they were really strong numbers. They will probably moderate some in the second half, and that will be a headwind. Capital markets has been soft in the first half, and I think we have talked about it in our Q1 call. I mean, they were on a clip for a record quarter in Q1. And then things sort of dropped off the cliff with the hostilities in the Middle East. But we feel really good about capital markets in the second half, and are hopeful that will sort of rebound to historic levels. Mortgage continues to be you know, weak. We do not see anything improving, and it could be a little bit weaker than what we saw in Q2. Wealth is very steady and growing, and it is an area too that I would cite as a beneficiary of some of the dislocation, that we are experiencing in our markets. So all in all, I would say that Q2 run-rate is probably pretty close to what we will do in the second half. Plus or minus a little bit, but that is probably a good jumping off point for what we see in the second half.

Okay. All right. Appreciate that, Jim. And then I guess going back to the expense discussion, I hear your point around the 2Q levels being a little bit elevated due to some of those items that you called out were unusual, a little heavier than what we typically see. I just want to make sure I understand the expectations for the third quarter. I think I heard you say it was going to be lower than what we saw in 2Q? Is there any more you can give us beyond that? Is there a range? Asking because it is a pretty big range from what we saw in the first quarter versus what we saw in the second quarter. Thanks.

Sure. It is. And I would say this, Matt. I mean, I do feel good about the $161.5 million coming down in Q3. I think the reason I would hedge a little bit on how far it comes down somewhat depends upon the success we have in this opportunistic hiring. And we have got some of that baked in. And then some of the the items in Q2. I mean, health and life is just a really difficult thing to project. But, I mean, that was over a million dollars in Q2. Above $1 million more than what it was in Q1. So it is a little tough to project, but we are hopeful and optimistic that it will come down and then stabilize what we see in Q3 will be a good indicator of what we expect to see for Q4. I know it is not probably giving you the specificity you want, but I think we were angling towards roughly a $161 million number internally for Q2 when we ended Q1, and I think absent some of these items we have called out, we would have been right on the mark there.

Okay. Understood. Well, several moving parts there. So definitely get the view there. Thanks, guys.

Thank you, Matt.

And this concludes our question-and-answer session. I would like to turn the conference back over to Kevin Chapman for any closing remarks.

Thank you, Joe, and thank you to all of those that have joined us this morning. We appreciate your interest in Renasant and look forward to meeting with you throughout the quarter. Thank you.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect your lines.