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RENASANT CORP (RNST)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid profitability with diluted EPS $0.65 and adjusted diluted EPS $0.66; net interest margin expanded 9 bps to 3.45% and cost of total deposits fell 13 bps to 2.22% .
  • EPS beat S&P Global consensus by ~$0.05 (Consensus $0.608; Actual $0.66); revenue was below S&P consensus by ~$$4.1M (Consensus $170.1M; Actual $165.9M). Bold beat/miss details in Estimates Context.
  • Strategic catalysts: completed merger with The First Bancshares on April 1, 2025; management guided for core NIM expansion of 10–15 bps in Q2 and all-in NIM up 20–30 bps, with conversion slated for early August .
  • Balance sheet momentum: loans +$170.6M (5.4% annualized), deposits +$199.5M linked-quarter with noninterest-bearing deposits +$137.4M and improved coverage/credit metrics .
  • Board declared a $0.22 quarterly dividend payable June 30, 2025 (record: June 16) .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin improved to 3.45% (+9 bps q/q) and total deposit costs fell to 2.22% (−13 bps q/q), reflecting disciplined pricing and favorable mix shifts .
  • Loans grew $170.6M linked-quarter (5.4% annualized), while deposits increased $199.5M with noninterest-bearing deposits up $137.4M to 24.0% of total, strengthening funding .
  • Mortgage banking income rose $1.3M q/q on higher lock volume ($632.1M; +$149.8M q/q); management: “good start to the year with solid profitability and growth in loans and deposits” .

Quotes

  • “Results for the quarter represent a good start to the year with solid profitability and growth in loans and deposits.” – CEO C. Mitchell Waycaster .
  • “Our adjusted net interest margin… increased 8 basis points to 3.42% for the quarter.” – CFO James Mabry .
  • “We successfully closed the merger… with early success we’re experiencing, and I’m excited about the future opportunities for Renasant.” – Kevin Chapman .

What Went Wrong

  • S&P Global revenue came in below consensus by ~$4.1M, despite stronger NIM; S&P framework differs from company “total revenue.” See Estimates Context*.
  • Adjusted loan yield declined 8 bps q/q to 6.19%, and gain-on-sale margin in mortgage fell 59 bps q/q to 1.42% amid rate volatility .
  • Provision for credit losses rose to $4.8M (vs $2.6M in Q4) mainly due to higher unfunded construction commitments; however, coverage ratios improved .

Financial Results

Core financials vs prior year and prior quarter

MetricQ1 2024Q4 2024Q1 2025
Diluted EPS ($)0.70 0.70 0.65
Adjusted Diluted EPS ($)0.65 0.73 0.66
Net Interest Income (FTE, $MM)125.9 135.5 137.4
Noninterest Income ($MM)41.4 34.2 36.4
Net Interest Margin (%)3.30 3.36 3.45
Cost of Total Deposits (%)2.35 2.35 2.22
Loans ($B)12.501 12.885 13.056
Deposits ($B)14.237 14.573 14.772
Provision for Credit Losses ($MM)2.4 2.6 4.8
ACL / Total Loans (%)1.61 1.57 1.56
Nonperforming Loans / Total Loans (%)0.59 0.88 0.76

Noninterest income breakdown

Category ($000)Q1 2024Q4 2024Q1 2025
Service charges on deposit accounts10,506 10,549 10,364
Fees and commissions3,949 4,181 3,787
Wealth management revenue5,669 6,371 7,067
Mortgage banking income11,370 6,861 8,147
BOLI income2,691 3,317 2,929
Other4,424 2,939 4,101
Total noninterest income41,381 34,218 36,395

KPIs and efficiency

KPIQ1 2024Q4 2024Q1 2025
Adjusted NIM (FTE, %)3.28 3.34 3.42
Adjusted Loan Yield (%)6.27 6.27 6.19
Efficiency Ratio (FTE, %)67.52 67.61 65.51
Adjusted Efficiency Ratio (%)68.23 65.82 64.43
PPNR (non-GAAP, $MM)51.8 52.4 56.7
Adjusted PPNR ($MM)48.2 54.2 57.5
ROAA (GAAP, %)0.92 0.99 0.94
Adjusted ROAA (%)0.86 1.03 0.95
Coverage (ACL / NPL, %)270.87 178.11 206.55

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core NIM expansion vs Q1Q2 2025Margin framework from July 2024 “relatively unchanged” +10–15 bps core NIM expansion vs Q1 Raised sequentially
All-in NIMQ2 2025Not specifiedAdditional +10–15 bps on top of core; total +20–30 bps vs Q1 New specificity
Expense baseline (post-merger)Q2 2025Not specifiedApprox. sum of recent quarterly expense bases for both companies plus merit increases Established baseline
System conversion timing2025H2 close/modeling (prior) Early August 2025 conversion; efficiencies show in late Q3/Q4 Timeline affirmed
CET1 pro formaQ2 2025“Just below 11%” at closing expected last July “Touch above 11%” CET1 in Q2 Higher capital
Share repurchases2025Authorization in place; no activity Optionality evaluated vs other uses; capital accretion 60–80 bps/yr; no Q1 activity Maintained; optionality stressed
DividendQ2 2025$0.22/qtr historical $0.22 payable June 30, record June 16 Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Oct)Q4 2024 (Jan)Q1 2025 (Apr)Trend
Merger with The FirstAnnounced; shareholder approvals; equity raise; insurance agency sale Planning, merger/conversion expenses Closed Apr 1; conversion early Aug; assumptions largely unchanged Integration progressing
Margin trajectoryNIM 3.36%; deposit cost +4 bps q/q NIM 3.36%; deposit cost −16 bps q/q NIM 3.45%; guide +20–30 bps all-in in Q2 Improving
Deposits & fundingDeposits +$254.5M; brokered down Deposits +$62.9M; NIBD down Deposits +$199.5M; NIBD +$137.4M; cost down Mix improving
Mortgage bankingIncome −$1.3M q/q; gain-on-sale margin 1.56% Income −$1.6M q/q; margin up 45 bps to 2.01% Income +$1.3M q/q; locks $632.1M; margin 1.42% Seasonal rebound; margin volatile
Credit qualityNPLs/loans up to 0.94%; criticized loans up NPLs/loans down to 0.88%; coverage ↑ NPLs/loans down to 0.76%; coverage 206.6%; provision ↑ on unfunded commitments Headline metrics improving; provisioning elevated
Tariffs/macro——Monitoring exposures, underwriting modifications contingency plans discussed Ongoing surveillance

Management Commentary

  • Prepared remarks emphasized a “good start to the year” with profitability, growth in loans/deposits, and successful closing of the First; focus on integrating two strong franchises to “accelerate profit performance” .
  • CFO highlighted adjusted NIM +8 bps q/q to 3.42%, deposit costs −13 bps to 2.22%, and adjusted efficiency ratio improvement; provision increase tied to growth in unfunded construction commitments .
  • Bond portfolio remix largely completed post-close: sold a little over 50% of First’s bond book and reinvested; execution “went really well” despite market volatility .
  • Capital optionality: CET1 expected “a touch above 11%” in Q2; buybacks one lever among several; parent holds ~3 years of cash for flexibility .

Q&A Highlights

  • Margin guidance: Core NIM expected to expand 10–15 bps in Q2; all-in NIM up another 10–15 bps (total 20–30 bps), subject to prepayment behavior .
  • Integration/cost saves: Conversion early August; efficiency benefits to emerge thereafter; clearer view by Q4’25 and a “clean” Q1’26 .
  • Capital/leverage: CET1 above 11% in Q2; capital accretion 60–80 bps/yr; optionality to call sub debt or repurchase shares as returns dictate .
  • Loan pipelines: Company pipeline strengthened (30-day pipeline $189M vs $174M prior); First’s legacy markets pipeline $83M vs $53M prior; net loan growth in Q2 likely low single digits given payoffs .
  • Mortgage outlook: Activity remains decent but sensitive to rate volatility; pipeline popped when rates dipped early April; positioned with prior hiring/products .

Estimates Context

  • EPS: Primary EPS Consensus Mean $0.608 vs Actual $0.66 → Bold beat of ~$0.05*.
  • Revenue: Consensus Mean $170.1M vs Actual $165.9M → Bold miss of ~$$4.1M*.
  • Note: Company-reported total revenue (FTE net interest income + noninterest income) was $173.8M; S&P “Revenue” definitions for banks may differ from company reporting .
MetricQ1 2025 ConsensusQ1 2025 Actual (S&P)Surprise
Primary EPS ($)0.60833*0.66*+0.05167*
Revenue ($USD)170,051,000*165,915,000*−4,136,000*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin trajectory improving: NIM expansion guidance (+20–30 bps all-in in Q2) plus deposit cost relief and mix shifts are constructive for near-term spread income .
  • Integration catalyst: Early-August conversion sets the stage for cost saves; expect visible efficiency gains in H2’25 and more comprehensive view by Q4’25–Q1’26 .
  • Balance sheet momentum: Loans and deposits both grew; noninterest-bearing deposits increased significantly, supporting lower funding costs and better NIM .
  • Credit remains manageable: NPLs and criticized loans ratios declined; coverage improved, though provisioning elevated due to pipeline of construction commitments .
  • Capital optionality: CET1 “above 11%” post-close provides flexibility to weigh buybacks, debt redemption, or organic growth funding; parent cash enhances agility .
  • Mortgage is a lever but rate-sensitive: Volumes improved; gain-on-sale margins compressed; monitor rate volatility impact on throughput and profitability .
  • Dividend continuity: $0.22/share maintained; total shareholder return lever sits alongside potential future buybacks and efficiency gains .

Appendix: Additional Q1 Materials and Prior Quarters

  • Q1 2025 earnings press release and 8-K with full financial tables (including non-GAAP reconciliations) .
  • Q1 2025 earnings deck highlights (capital, liquidity, asset quality, profitability ratios) .
  • Merger completion announcement (Apr 1, 2025) .
  • CEO transition (May 1, 2025): Kevin D. Chapman assumed CEO/President; Waycaster becomes Executive Vice Chairman .
  • Prior quarters: Q4 2024 results and tables; Q3 2024 results and tables for trend analysis .