Renasant sees post-merger earnings increase

TUPELO — Renasant Corporation has released its financial results for the first quarter of 2013.

Net income for the first quarter of 2013 was $7,571,000, or basic and diluted earnings per share (EPS) of $0.30, as compared to $5,974,000, or basic and diluted EPS of $0.24, for the first quarter of 2012.

“Our strong start to 2013 represents the fifth consecutive quarter of improvement in net income and earnings per share. The results for the first quarter of 2013 reflect loan and deposit growth, higher levels of noninterest income, and lower credit costs as we experienced significant improvements in our credit quality metrics,” said Renasant chairman and CEO E. Robinson McGraw. “In addition to our strong financial start for this year, during the first quarter of 2013, we also announced our plans to acquire First M&F Corporation, a bank holding company headquartered in Kosciusko, Miss., and the parent of Merchants and Farmers Bank, a $1.6 billion financial services company with 36 full-service locations in Mississippi, Alabama and Tennessee. This will be the largest merger in our company’s history and, upon completion of the transaction, the pro forma combined company will have approximately $5.8 billion in total assets and 123 full-service locations.”

Total assets as of March 31, 2013, were approximately $4.27 billion, as compared to $4.18 billion as of Dec. 31, 2012. At March 31, 2013, the company’s Tier 1 leverage capital ratio was 9.79 percent, its Tier 1 risk-based capital ratio was 12.86 percent and its total risk-based capital ratio was 14.13 percent.  In all capital ratio categories, the company’s regulatory capital ratios continued to be in excess of the regulatory minimums required to be classified as “well-capitalized.”  The company’s tangible common equity ratio was 7.65 percent as of March 31, 2013.

Loans not covered under FDIC loss-share agreements were $2.59 billion as of March 31, 2013, as compared to $2.28 billion as of March 31, 2012, and $2.57 billion as of Dec. 31, 2012. Loans covered under loss-share agreements decreased to $214 million as of March 31, 2013, as compared to $318 million as of March 31, 2012 and $237 million as of Dec. 31, 2012. Total loans, which include both loans covered and not covered under FDIC loss-share agreements, were approximately $2.81 billion as of March 31, 2013, as compared to $2.60 billion as of March 31, 2012, and $2.81 billion as of Dec. 31, 2012.

“Our moderate loan growth during the first quarter of 2013, excluding the decline in covered loans, reflects not only the cyclical slowing we typically experience during this time period but also higher levels of paydowns, including approximately $20.4 million in principal reductions of problem credits. Looking ahead, our loan pipelines and opportunities for growth throughout all of our markets project more pronounced loan growth for the remainder of 2013,” said McGraw.

Total deposits were $3.56 billion as of March 31, 2013, as compared to $3.47 billion as of March 31, 2012, and $3.46 billion as of Dec. 31, 2012. The company continues to improve its deposit mix by replacing higher-costing funds with lower-costing core deposits. The result of these continued changes to the company’s funding mix, coupled with a reduction in borrowed funds, has reduced its cost of funds 22 basis points to 0.62 percent for the first quarter of 2013, as compared to 0.84 percent for the first quarter of 2012; the company’s cost of funds was 0.64 percent for the fourth quarter of 2012.

Net interest income was $33.4 million for the first quarter of 2013, as compared to $32.8 million for the first quarter of 2012, and $33.9 million for the fourth quarter of 2012. Net interest margin was 3.89 percent for the first quarter of 2013, as compared to 3.85 percent for the first quarter of 2012, and 3.97 percent for all of 2012. One factor contributing to the company’s linked quarter decline in net interest margin was the seasonal influx of public fund deposits, which resulted in higher levels of cash. Although these higher cash balances have a minimal effect on net interest income, they reduced net interest margin 5 basis points in the first quarter of 2013 when compared to the fourth quarter of 2012.

Noninterest income was $17.3 million for the first quarter of 2013, as compared to $16.4 million for the first quarter of 2012, and $17.9 million for the fourth quarter of 2012. While mortgage income increased for the first quarter of 2013 as compared to the first quarter of 2012, the company did experience an expected seasonal decrease on a linked quarter basis. However, the company’s mortgage pipeline steadily increased throughout the first quarter of 2013 and mortgage production for the remainder of 2013 is expected to be strong.

Noninterest expense was $37.6 million for the first quarter of 2013, as compared to $36.6 million for the first quarter of 2012, and $38.3 million for the fourth quarter of 2012. The company’s increase in noninterest expense on a year-over-year basis was primarily due to de novo expansions, commissions paid on the increased volume of mortgage loan production, and increased health insurance costs. The decrease in noninterest expense on a linked quarter basis was primarily driven by a reduction in expense related to other real estate owned (OREO).

The company charged-off $893,000 during the first quarter of 2013, an 82 percent decrease from net charge-offs of approximately $5.0 million during the same period in 2012. Annualized net charge-offs as a percentage of average loans were 0.13 percent for the first quarter of 2013, as compared to 0.77 percent for the first quarter of 2012, and 0.53 percent for the fourth quarter of 2012. The company recorded a provision for loan losses of $3.1 million for the first quarter of 2013, as compared to $4.8 million for the first quarter of 2012, and $4.0 million for the fourth quarter of 2012.

The allowance for loan losses totaled $46.5 million at March 31, 2013, as compared to $44.2 million as of March 31, 2012, and $44.3 million as of Dec. 31, 2012. The allowance for loan losses as a percentage of loans was 1.79 percent as of March 31, 2013, as compared to 1.94 percent as of March 31, 2012, and 1.72 percent as of Dec. 31, 2012.

“Consistent with our lower level of charge-offs and improved risk profile from the $20.4 million in principal reductions of problem credits, in the first quarter of 2013, we reduced our provision for loan losses as compared to previous periods. Even though our provision for loan losses decreased, we experienced an increase in our allowance for loan losses, coverage ratio and ratio of allowance to total loans,” commented McGraw.

Total nonperforming loans (nonaccrual loans and loans 90 days or more past due) were $76.0 million as of March 31, 2013, while total nonperforming assets (nonperforming loans and OREO) were $150.8 million at March 31, 2013.

Nonperforming assets covered under FDIC loss-share agreements totaled $83.1 million as of March 31, 2013, down from $115.3 million as of March 31, 2012, and $98.7 million as of Dec. 31, 2012.

Nonperforming loans and OREO covered under FDIC loss-share agreements totaled $48.0 million and $35.1 million, respectively, as of March 31, 2013, compared to $79.8 million and $35.5 million, respectively, as of March 31, 2012, and $53.2 million and $45.5 million, respectively, as of December 31, 2102. The remaining discussion in this release of nonperforming loans, OREO and the related asset quality ratios exclude these assets covered under FDIC loss-share agreements.

The company’s nonperforming loans were $28.0 million as of March 31, 2013, down from $30.4 million as of March 31, 2012, and $30.2 million as of Dec. 31, 2012. Nonperforming loans as a percentage of total loans were 1.08 percent as of March 31, 2013, as compared to 1.33 percent as of March 31, 2012 and 1.17 percent as of Dec. 31, 2012.

The company’s coverage ratio, or its allowance for loan losses as a percentage of nonperforming loans, was 166.19 percent as of March 31, 2013, as compared to 145.15 percent as of March 31, 2012, and 146.90 percent as of December 31, 2012. Loans 30 to 89 days past due as a percentage of total loans remained at pre-recession levels and were 0.32 percent as of March 31, 2013, as compared to 0.59 percent as of March 31, 2012, and 0.31 percent as of Dec. 31, 2012.

With respect to the improvement in credit quality, McGraw stated, “We were especially pleased with our credit quality metrics during the first quarter of 2013 as we experienced significant improvement in nonperforming loans, early stage delinquencies and nonperforming assets as compared to both a year-over-year and linked quarter basis. Net charge-offs totaled $893,000, which represents the lowest quarterly charge-off level since the third quarter of 2007.”

OREO was $39.8 million as of March 31, 2013, as compared to $64.9 million as of March 31, 2012, and $44.7 million as of Dec. 31, 2012.  The company continues to work aggressively to market OREO and currently has approximately $5.9 million in OREO under purchase agreements which are expected to close during the second quarter of 2013. During the first quarter of 2013, the company experienced a significant reduction in costs associated with OREO as OREO expense decreased approximately 50 percent as compared to the first quarter of 2012.

“As we look toward the remainder of 2013 and beyond, we see many positives on the horizon as our pipelines for both commercial loans and secondary market mortgage loans have returned to robust levels; we are beginning to experience the full benefit from our de novo market entries, and our credit quality continues to move back toward healthier pre-recession levels. Concurrently, we are working with our new partners at First M&F Corporation to ensure the foundation is in place for a smooth merger and conversion,” stated McGraw.

[RSS Feed] [del.icio.us]



To sign up for Mississippi Business Daily Updates, click here.

POST A COMMENT

 

Twang & Tourism: The Country Music Trail

Our annual "Come See Us" magazine offers ideas for spots in Mississippi ranging from golf to culture to history to food. Click the photo for ideas, stories and access to the digital edition of this year's magazine.

Still planning that summer vacation?

Our annual "Come See Us" magazine offers ideas for spots in Mississippi ranging from golf to culture to history to food. Click the photo for ideas, stories and access to the digital edition of this year's magazine.

FOLLOW THE MBJ ON TWITTER

Top Posts & Pages

%d bloggers like this: