Renasant (US:RNST)2025-08-06 20:36PART I Financial Information Item 1. Financial Statements (Unaudited) Unaudited Q2 2025 financial statements reflect significant asset, loan, and deposit growth from the First Bancshares acquisition, though net income declined due to credit loss provisions and merger expenses Consolidated Balance Sheets Total assets, net loans, and deposits significantly increased by over 40% as of June 30, 2025, primarily driven by the First Bancshares acquisition Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $26,624,975 | $18,034,868 | +$8,590,107 | +47.6% | | Loans, net | $18,272,677 | $12,683,264 | +$5,589,413 | +44.1% | | Goodwill | $1,419,782 | $988,898 | +$430,884 | +43.6% | | Total Deposits | $21,582,637 | $14,572,612 | +$7,010,025 | +48.1% | | Total Liabilities | $22,846,121 | $15,356,550 | +$7,489,571 | +48.8% | | Total Shareholders' Equity | $3,778,854 | $2,678,318 | +$1,100,536 | +41.1% | Consolidated Statements of Income Q2 2025 net income plummeted due to a large provision for credit losses and merger expenses, despite strong net interest income growth Q2 2025 vs Q2 2024 Performance (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $218,859 | $125,026 | +75.1% | | Provision for Credit Losses | $81,322 | $3,300 | +2364.3% | | Noninterest Income | $48,334 | $38,762 | +24.7% | | Noninterest Expense | $183,204 | $111,976 | +63.6% | | Net Income | $1,018 | $38,846 | -97.4% | | Diluted EPS | $0.01 | $0.69 | -98.6% | - Merger and conversion related expenses of $20.5 million were a significant contributor to the increase in noninterest expense in Q2 202512 Consolidated Statements of Comprehensive Income Q2 2025 comprehensive income significantly decreased to $8.6 million, primarily comprising net income and unrealized gains on available-for-sale securities Comprehensive Income Summary (in thousands) | Component | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $1,018 | $38,846 | $42,536 | $78,255 | | Other Comprehensive Income, net of tax | $7,580 | $2,827 | $28,567 | $140 | | Comprehensive Income | $8,598 | $41,673 | $71,103 | $78,395 | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased to $3.78 billion by June 30, 2025, primarily driven by the issuance of 31.2 million shares for an acquisition, partially offset by cash dividends - The company issued 31,238,172 shares of common stock valued at $1,059,911 thousand in connection with an acquisition during the six months ended June 30, 202517 - Cash dividends of $0.44 per share were paid during the first six months of 2025, totaling $35.4 million1217 Consolidated Statements of Cash Flows Cash and cash equivalents increased by $286.6 million for the six months ended June 30, 2025, driven by financing activities and partially offset by investing activities Six Months Ended June 30 Cash Flow Summary (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $28,861 | $15,980 | | Net Cash used in Investing Activities | ($262,173) | ($43,479) | | Net Cash from Financing Activities | $519,892 | $78,054 | | Net Increase in Cash | $286,580 | $50,555 | - The company received net cash of $261.5 million from the acquisition of businesses and issued $1.06 billion in common stock for the same transaction, indicating a significant non-cash financing and investing activity20 Notes to Consolidated Financial Statements The notes detail accounting policies, the $1.06 billion acquisition of The First Bancshares, Inc., portfolio compositions, credit loss allowance, regulatory capital, and segment performance - Effective April 1, 2025, the Company completed its acquisition of The First Bancshares, Inc. in a transaction valued at approximately $1.06 billion, issuing 31,238,172 shares of common stock26 - The acquisition resulted in the recording of approximately $430.9 million in goodwill and a $159.6 million core deposit intangible27 - The allowance for credit losses on loans increased to $290.8 million at June 30, 2025, from $201.8 million at year-end 2024, with the increase largely driven by a provision related to the acquisition and organic loan growth9395 - As of June 30, 2025, both Renasant Corporation and Renasant Bank were categorized as 'Well Capitalized' under all regulatory measures, with a Total Capital to Risk-Weighted Assets ratio of 14.97% for the corporation and 13.13% for the bank167 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes significant financial changes to the April 1, 2025, acquisition of The First Bancshares, Inc., impacting assets, loans, deposits, and Q2 net income due to credit loss provisions and merger expenses - The acquisition of The First increased total assets by $7.99 billion, total loans by $5.20 billion, and total deposits by $6.45 billion on April 1, 2025183189192 Impact of Special Items on Q2 2025 Diluted EPS | Item | Pre-tax Impact (in thousands) | After-tax Impact (in thousands) | Impact to Diluted EPS | | :--- | :--- | :--- | :--- | | Merger and conversion expenses | $(20,479) | $(15,875) | $(0.17) | | Day 1 acquisition provision | $(66,612) | $(50,026) | $(0.53) | - Net interest margin for Q2 2025 was 3.85%, an increase from 3.31% in Q2 2024, benefiting from the acquisition, loan growth, and lower interest rates in the second half of 2024204206 - Nonperforming loans as a percentage of total loans decreased to 0.76% at June 30, 2025, from 0.88% at December 31, 2024262 Quantitative and Qualitative Disclosures about Market Risk The company reports no material changes in its market risk since December 31, 2024, referring to its 2024 Annual Report on Form 10-K for further details - There have been no material changes in the company's market risk since December 31, 2024304 Controls and Procedures The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures are effective as of June 30, 2025305 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls305 PART II Other Information Risk Factors The company reports no material changes from the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes from the risk factors set forth in the company's 2024 Annual Report on Form 10-K306 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities and no share repurchases under its $100 million program during Q2 2025, except for 2,799 shares withheld for tax liabilities - No shares were repurchased during Q2 2025 under the $100 million stock repurchase program authorized in October 2024308310 - A total of 2,799 shares were purchased during Q2 2025, all of which were shares withheld to satisfy tax liabilities from vesting restricted stock awards, not as part of the public repurchase plan308 Other Information During the quarter ended June 30, 2025, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025311 Exhibits This section lists the exhibits filed with the Form 10-Q, including the merger agreement with The First Bancshares, Inc., various indentures, employment agreements, and required certifications by the CEO and CFO