Renasant (US:RNST)2023-07-26 16:48Financial Data and Key Metrics Changes - The second quarter earnings were $28.6 million or $0.51 per diluted share, with a core EPS of $0.83, reflecting a $0.01 increase from the first quarter [10] - Net interest income increased due to a rise in loan interest income of over $11 million, while deposit interest expense rose by $18.5 million [7][10] - The balance sheet contracted by $250 million from March 31, with solid loan growth of $165 million, representing an annualized growth rate of 5.6% [30] Business Line Data and Key Metrics Changes - Non-interest income increased modestly quarter-over-quarter, with strong results from capital markets, treasury solutions, wealth management, and insurance lines [11] - The mortgage division saw an increase in income of $1.3 million on a linked-quarter basis, with a gain on sale margin increasing by 51 basis points [11] Market Data and Key Metrics Changes - Total deposits increased slightly during the quarter, with a loan-to-deposit ratio holding constant at 85% [28] - Non-interest-bearing deposits decreased to 27% of total deposits from 31% at March 31, while the cost of deposits increased to 1.5% [31] Company Strategy and Development Direction - The company is focused on core deposit growth and managing funding costs, aiming to reduce reliance on brokered deposits [59] - The management emphasized maintaining a strong balance sheet and enhancing optionality for future growth opportunities [24][80] Management's Comments on Operating Environment and Future Outlook - The current operating environment remains volatile, but the company is optimistic about economic growth in its markets [9] - Management expects some relief in funding costs from recent balance sheet repositioning, although competitive pressures are likely to persist [33][66] Other Important Information - The company recorded a credit loss provision of $3 million, with net charge-offs at $3.9 million, representing an annualized rate of 13 basis points [32] - The efficiency ratio, excluding the loss on the sale of securities, was 63% for the quarter, with ongoing efforts to improve operating leverage [29] Q&A Session Summary Question: Impact of the security sale on future quarters - The security sale had a minimal impact on Q2, but it is expected to benefit future earnings by improving balance sheet flexibility [38] Question: Outlook on deposit beta expectations - The company anticipates deposit betas to be around 50%, with a focus on reducing brokered deposits over the next few quarters [46][59] Question: Loan production outlook and competitive dynamics - Loan production was solid, with $413 million this past quarter, and management remains optimistic about future production despite some moderation in pipelines [50][73] Question: Efficiency ratio and mortgage profitability - The efficiency ratio for the mortgage division is in the mid-90s, with expectations for elevated expenses in the coming quarters due to mortgage-related costs [76]