Renasant (RNST)2023-01-25 18:11Financial Data and Key Metrics Changes - The company's fourth quarter earnings were 0.82 per diluted share, compared to 0.83 per diluted share in the third quarter [18] - Adjusted diluted EPS for the fourth quarter was 7.8 million quarter-over-quarter, largely due to the mortgage division [26] Business Line Data and Key Metrics Changes - The acquisition of Republic Business Credit (RBC) added 396 million in organic loan growth [14][18] - The mortgage division continues to experience volatility, with origination volumes beginning to normalize but margins remaining unpredictable [19] - Capital Markets, Treasury Solutions, Wealth Management, and Insurance lines were solid contributors to earnings this quarter [19] Market Data and Key Metrics Changes - The company experienced a decline in non-interest bearing deposits of 233 million in brokered time deposits in November [14] - The cost of deposits increased by 31 basis points from Q3 to 52 basis points this quarter, with expectations for continued competitive pressures in 2023 [25] Company Strategy and Development Direction - The company aims to build more scale and reach in specialty lines of business through acquisitions like RBC [18] - Focus remains on sound banking principles, retaining attractive core funding, and maintaining a diverse loan portfolio [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023 despite economic uncertainties, citing attractive markets with growth and net in-migration [9] - The outlook for net interest margin (NIM) is characterized as flat to slightly down for 2023, with expectations of better performance in the first half [37] Other Important Information - The adjusted efficiency ratio improved to 56.3% for the fourth quarter, reflecting revenue lift from margin expansion and expense discipline [12] - The company expects non-interest expenses to increase modestly in 2023 due to inflationary pressures [27] Q&A Session Summary Question: Outlook on margin and NII growth - Management characterized the margin outlook for 2023 as flat to slightly down, with core NIM for November at 3.78% and December at 3.76% [36][37] Question: Changes in deposit beta - The company is using a deposit beta of about low 40s for the cycle, which is an increase from six months ago [38] Question: Expectations for mortgage business - The mortgage division is still volatile, but there are positive trends with a 30% increase in the mortgage pipeline since the beginning of the year [47] Question: Reserve build and credit metrics - The reserve build was primarily in the commercial space due to the acquisition of RBC, with legacy Renasant's provision remaining flat quarter-over-quarter [49] Question: Loan growth expectations - The company expects moderate loan growth, with production for Q4 at 753 million in the previous quarter [51]