RNST Q3 2026 earnings call transcript, October 28, 2026

Good day, and welcome to the Renaissance Corporation 2026 third quarter earnings conference call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the start key followed by zero. After this presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your time. To withdraw your question, please press star and 2. Please note, this event is being recorded. I would now like to turn at the conference over to Kelly Hutchison. Please go ahead.

Good morning, and thank you for joining us for Renaissance Corporation's quarterly webcast and conference call. Participating in the call today are members of Renaissance executive management team. Before we begin, please note that many of our comments during this call will be forward-looking statements, which involve risk and uncertainty. There are many factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. Such factors include, but are not limited to, changes in the mix and cost of our funding sources, interest rate fluctuation, regulatory changes, portfolio performance, requirements, realization of the projected... ...financial metrics from our recently announced merger with Commercial Holding Company and other factors discussed in our recent filings with the Securities and Exchange Commission, including our recently filed earnings release and the press release announcing the proposed merger, both of which have been posted to our corporate site, www.renaissance.com, at the press releases link under the News and Market Data tab. We undertake no obligation, and we specifically disclaim any obligation to update a... ...revised forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes to future operating results over time. In addition, some of the financial measures that we may discuss this morning are non-GAAP financial measures. A reconciliation of the non-GAAP measures and our earnings release to the most comparable GAAP measures can be found in such release. And now, I will turn the call over to our President and Chief Executive Officer, Kevin Chapman.

Thank you, Kelly, and good morning. Third quarter results continue to show momentum in achieving our financial goals, adding talent, and gaining market share. Adjusted earnings per share in the third quarter were 86 cents, up 12% from one year ago. Adjusted return on average assets was 1.16% in the quarter, compared to 1.09% in the same period last year. Similarly, adjusted return on average tangible common equity was 14.5% versus 14.2% in the third quarter of 25. The efficiency ratio also improved to 57.7% this quarter. Our core business continues to perform well. Highlights this quarter include strong loan and core deposit growth, a record level of loan production, a stable core net interest margin, a reduction in problem credits, a reduction in expenses, and continued buybacks. While EPS declined link quarter, this was primarily due to a higher provision driven by the ramp in loan growth. In addition, we are pleased this morning to announce the merger with Commercial Bank and Trust, which will strengthen our presence in Memphis and provide solid, long-tenured deposit and wealth management relationships throughout western Tennessee. We are looking forward to welcoming Mott Ford and the commercial team to Renasant, and importantly, we do not believe this deal will distract us from the market share off. We continue to see across our footprint. Altogether, Renasant is in a great position to continue to improve financial performance and capitalize on growth opportunities, and the commercial acquisition will be added to that momentum.

I will now turn the call over to Jim to provide more details on the financial results.

Thank you, Kevin, and good morning. Looking at the balance sheet, loans were up $555.9 million, and a late... on the second quarter basis, or 11.5% annualized. Deposits were down $73.2 million from the second quarter, or 1.3% annualized, primarily due to outflows of public fund deposits and a couple larger non-core higher-cost relationships, offset by about 8% annualized growth in consumer and commercial deposits. reported net interest margin decreased six basis points. to 3.77%, while adjusted margin was down two basis points at 3.58%. Excluding the accelerated bond discount accretion last quarter, core net interest margin was up two basis points link quarter. Our total cost of deposits increased by only one basis point to 1.97%, while adjusted loan yields increased five basis points to 6.08%. From a capital standpoint, all regulatory capital ratios remain in excess of required minimums to be considered well capitalized. We recorded a credit loss provision on loans of $13.3 million comprised of $10.1 million for funded loans and $3.2 million for unfunded commitments. Net charge offs were $10 million and the ACL as a percentage of total loans declined. Four basis points quarter over quarter to 1.50%. Turning to the income statement, our pre-provision net revenue was $112.6 million. Net interest income was $228.6 million, an increase of $0.9 million quarter over quarter. Excluding fair value accretion and the accelerated bond discount accretion last quarter, core net interest income increased $5.8 million

link quarter or 11% annualized. Non-interest income was $49.3 million in the third quarter, a link quarter decrease of $1.9 million, which was primarily driven by a decrease in mortgage banking income. Non-interest expense was $160.3 million for the third quarter, a link quarter decrease of $1.2 million, mostly driven by a decline in deferred compensation accruals. As to the commercial bank and trust transaction, we have provided a supplementary slide deck with details on this transaction. A few highlights. The deal value is approximately $140 million and is comprised of roughly 75% stock and 25% cash. Slide four provides an overview of commercial's high quality low-cost core deposit base. We anticipate the deal to be approximately 4% accretive to EPS and 1.5% dilutive to tangible book value per share with an estimated earnback of just under two years. We expect to see modest diminution to the capital ratios with CET1 being approximately 11% at close. We anticipate the deal to close sometime in the first quarter of 2027. I will now turn the call back over to Kevin. Thank you, Jim. We believe that Renasant is in a great position to continue high levels of performance while also taking advantage of opportunities created by industry consolidation. We appreciate your interest in Renasant and look forward to discussing our results with you. I will now turn the call over to the operator for questions.

Thank you very much. We will now begin the question and answer session. To ask a question, you may press star and 1 on your telephone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and 2. At this time,

we will pause momentarily to assemble a roster. Our first question comes from Stephen Scalton with Piper Suntler. Please go ahead.

us the ability to remix that funding. And really, it's driven on an effort to bring our cost of deposits down back in line with our peer and isolating that one difference. But as we look out, we feel that having a balance sheet or a strategy with growing our balance sheet in the mid-single digits, that over time, that allows us to properly fund it. And so I know this quarter deposits didn't keep up with the loan growth, but over time, we expect that to be more in balance and more in line. Okay, great. And then maybe thinking about the deal alongside of that, it looks like a really nice deposit base, 150-year-old bank with a low loan deposit ratio. Was that one of the primary strategic motivators on this deal? Or can you talk a little bit about what you liked and what drove that decision? Yeah, no, thank you. And it is. We, just a continued focus of growing a stable. core deposit base. That's been our focus organically. And then the opportunity with M&A to augment, to complement that, is something that I think we've talked about, that we would look at that. And I think if you look at commercial and what it represents, a very strong core funded deposit base with complementary wealth management, that fits exactly the type of opportunity that would complement what we're doing. Said another way, I'm not sure right now we have a limit to our appetite on core deposits. We continue to feel and see that deposits and funding are tightening up. That is our number one focus is continuing to grow our core deposit base. This just gives us a complementary opportunity to bolster and enhance what we're already working on at Renaissance and frankly what we already have at Renaissance. But it just complements.

And look, future opportunities that may fit a similar profile, we would absolutely look at, but would say right now our focus is commercial and ensuring that we have a successful conversion and integration of their employees, our new teammates, as well as our new customers.

And just maybe last for me, with the strong loan growth and a pending deal, does that inhibit you from the repurchase utilization in the near terminal? Jim? Do you want to take that? Good morning, Stephen. It's Jim. So, you know, clearly, as you pointed, we've got some cash in the deal mix. And that will probably, at the margin, temper a little bit what we do in terms of buybacks. But buybacks are very much on the table. You know, the board reauthorized our program yesterday at $175 million. So we do intend to be active. It just may not be quite as active over the next 12 months as it was at the prior, but we'll see, you know, sort of what emerges in the environment and what goes on with our share price and other things. But intend to be active, just maybe not quite as active as we have been. Yep. Makes sense when you can deploy it into acquiring low-cost deposits. So thanks for all that. All the color. Thanks, guys. Thanks, Steve.

Our next question comes from Michael Rose with Raymond James. Please go ahead.

Uh, very helpful, uh, Jim. I appreciate it. And then, Kevin, um, obviously very strong loan growth this quarter. Um, obviously very, uh, strong loan production, a record, moderate payoff. Um, you know, how much of that acceleration really is from some of the investments you've made in, in talent, you know, over the. past year or so versus maybe market disruption, just, just trying to kind of level set, uh, you know, what the, what the drivers were. It seems like everything clicked this quarter. And I think you had talked about kind of a mid single digit, um, you know, loan growth, you know, kind of outlook. Is that the way we should think about 2027 or could it be potentially stronger just given, you know, some of those, uh, those dynamics that I just laid out? Thanks. Yeah. So, uh, so thank you, Michael. Um, just the, the last part, uh, last part of your question first. Um, so, so we still feel, we'll still feel confident that, uh, that mid single digit balance sheet growth is the appropriate, appropriate level of growth. Um, and, uh, I mean, look, as we see, as we see the environment and our outlook, we, we are still, um, optimistic, uh, about being able to grow the balance sheet. We still have good commentary and dialogue with our customers, but, but, but I think if there's any hesitation to try to move that number up from the mid single digits, to do it. It's just more concerned, but from a macro backdrop. And so as we get clarity about, about what the macro economic looks like, and we might have a little bit more confidence to kind of push that number up. But right now, I think we're still very set on mid single digit growth. And that's the appropriate level. As it relates to where that growth is coming from, I think it's coming from all across the company. If we look at it from a geographic or from a region standpoint, everybody's contributing.

We look at some of our specialty lines, our secured lending. Everybody's contributing. When we look at credit channels, whether it's consumer or commercial or small business or larger corporate, again, everybody is contributing to this. It's not coming from a single law for one source. And honestly, that's exciting to see because it means everybody's plugged in and capturing opportunity throughout their market. And also, I think it's in. Indicative of the investments that we made, not so much this year in the talent that we've hired, but really bringing the first and their team on board and allowing them to continue to achieve success, expand opportunity, capabilities. I think that's what we're seeing this year, which means the built-up demand, the opportunity from the hiring we've done this year. And by the way, this past quarter, we added another 11 revenue producers to the team. There will be the opportunity to continue to take market share that isn't quite reflected in the balance sheet yet. And I would just add to that, Mike, on the right-hand side of the balance sheet, Kevin spoke earlier that, you know, that underlying core deposit growth was around 8% annualized for the quarter. And of that 8%, a little over half, almost 60% of that 8%. were from deposit customers who were new to Renaissance, who previously had no account with Renaissance. So I think that speaks, and we've had that in Q2 as well. So I think the momentum, certainly in the right-hand side of the balance sheet is there. We expect that to carry over on the left-hand side of the balance sheet in terms of market share gains and net new customers to Renaissance.

Yeah, and sorry just to continue to belabor a point, but I mentioned just some of the uncertainty about the macro outlook. And again, just one I just want to level set the mid-single digits because we don't want to try to force balance sheet growth. And we already see very tight competition from a yield standpoint. So if we set higher levels of expectations or try to push to get higher levels of growth, we may have to give on something to be able to get that. And we're not going to sacrifice credit. We're not going to sacrifice yield. We're going to be relevant. We're going to be competitive. But don't want to try to force something and make a bad decision just because of trying to set an expectation of higher levels of balance sheet growth. We need it to come at the proper level of margin and have the proper level of underwriting and credit risk as well. So that's just a level set. I think we've talked about this in the past. That mid-single digit, we feel that gives us the ability to have a stable to expanding margin and grow the balance sheet at our historical credit risk. I appreciate all the color. That's very helpful, Kevin. Thanks, everyone. I'll step back. Thank you, Michael. The next question comes from Matt Olney. Please go ahead.

Good morning, Matt, and this is Jim. So, yeah, we were pleased with the behavior of the expense line in the quarter, and to see that number continue to, you know, trend down. I think as we look to Q4, our outlook is for... Slight increase in expenses, which could almost be 100% tied to what Kevin referred to earlier, and that's hires. We've had, you know, really good success on taking advantage of the dislocation and making some key hires, and we expect that to continue in Q4. So, I would say that core behavior away from dislocation opportunities remains very solid and steadfast, but again, I think you'll see the number inch up a little bit because of the hires we've made. Another thing I'd mention, which of course you would appreciate, there'll probably be a little bit of noise in Q4 because we'll have likely some merger expenses related to commercial. Okay, great. I appreciate the color there. And then I guess going back to the margin commentary that you provided earlier, any more color you can provide on just competitive pressures on both loans and deposits? Any notable changes? What you're hearing more recently compared to a few months ago? Not really a change. I would just say this past year, it's been competitive, just particularly from a rate standpoint. What has become more pronounced maybe over the last quarter, and we saw this in Q2, is the competition on the deposit side. That continues. Everybody's searching for funds.

Funding, and I think if you look at our cost of deposits with what we've been able to grow and keeping our cost of deposits relatively flat, maybe it was up a basis point or two, it shows where our focus is around where we have the opportunity to grow core deposits. I think Jim mentioned just some of that core deposit growth that we had in Q3. That came on at a rate, you'll call it in the mid-twos, and that's a percentage point. Percentage point and a half less than the wholesale rates or even some of the product offerings that we're seeing in the market. So everything, from a pricing standpoint, everything just continues to remain competitive. I think the dynamic in Q3 is that you saw the yield curve shift up. Rates were up, particularly in the five and the 10-year point of the curve. And we worked to move our yields up, but spreads didn't necessarily expand during that same time. Oh, and so that what we talk about with those competitive pressures is that the spreads just continue to be very tight, which means competition. It just is very competitive for that good balance sheet growth that everybody's looking for. Okay, guys. Thanks for all the responses. I'll step back. Thank you, Matt. The next question comes from Will Jones with KBW. Please go ahead.

Hey, so I know just a couple questions, one with a deal, a couple with a quarter. I know we never model, you know, revenue synergies with these transactions, but what you call kind of a nice little wealth business they got there. Maybe, Kevin, just talk about what you see opportunity-wise there. If I heard you right, if another, you know, commercial bank and trust were to come along, you know, Rent-A-Zon is still very much open for M&A, you know, if that kind of size and… Neil Primer were to come along? Yeah. So, let me just clarify. So, I would say that the opportunity with commercial fits the profile of what we're looking for. Not necessarily looking to stack up a bunch of things, but this is the profile of what we're looking for.

On…just on the revenue synergies, we haven't really modeled any revenue synergies. We do believe there'll be opportunity for that. With their wealth management, as we know today… They've got over a billion in assets under management in the wealth division, largely concentrated in trust. We have a trust department, and so we're excited about the opportunity to expand and enhance our trust capabilities in wealth management. And also, their growth in wealth management, particularly in trust, has been at a notch or two higher than ours. So, there could be the opportunity for revenue synergies, but it may be more on the renaissance side and what we can learn from them. About strategies to pick up trust business throughout our footprint in as much as the opportunity with them.

Got it. Okay. I appreciate all that helpful commentary. Jim, maybe one for you. Just on the balance sheet, I know borrowings were a little bit higher in the quarter, just as we had some of the seasonal public fund runoff. Is the expectation, as you guys feel better about the deposit pipeline next quarter, that we would start to see those balances decline? Is your place with some of this expected deposit growth? Good morning, Will. It's a good question. Obviously, our loan deposit ratio is inched up a little bit. I think we're 90%, 91%. I think for us, we wouldn't want to get much above that. We'll be looking at that funding mix. We saw some really encouraging things in Q3 about that core deposit growth, which was masked by trying to exit some higher car costing deposits. Our hope and our goal remains to match loan growth as close as we can with deposit growth. Clearly, that's a tougher thing now than it has been historically, but we feel really good about the things we're seeing in terms of our deposit engine working well. The goal is to try to match that. We don't want to be reliant on wholesale funding. Whether that's advances or broker deposits, that's not really part of our plan. And so I think whether it's next quarter and subsequent quarters, our goal would be to, we like operating with zero balances, both at the FHLB and with broker deposits, and that's a goal. Yeah, okay. That's fair enough. Maybe last for me, we don't really spend a ton of time talking about credit, especially with Arizona. If I look at MPA trends, quarter size trends, everything continues to show modest improvement every quarter.

Yeah. But we still find ourselves with a pretty high level of reserves just on a percentage basis. Is there a point in time where that starts to bleed down or we can reliably feel comfortable taking reserve levels down just as we remain relatively benign credit-wise?

Hey, Will. Good morning. This is Dave and Meredith. And I think what you'll see over the past couple quarters is you've seen just what you've stated. As we've continued to have improved asset quality, our criticizing classifies come down for four quarters in a row, as you pointed out. Our NPAs have been down for the past two quarters. And commensurate with that, you can see we've brought down our reserve level. Just as our model dictates, based on the improvement of our asset quality, as we continue to resolve problem loans, criticized classifies, NPLs, so forth, past dues come down, our reserve requirements, commensurate with that, have come down. So we've seen that number come down from, I want to say, 156, next week. 157 a couple of quarters ago to 154 last quarter to 150, and so we would foresee as we continue to improve asset quality, the expectation would be our model would dictate that that reserve level would continue to come down. So we follow the model based on need for loan growth, what our asset quality is telling us, and so the past couple quarters, based on that improvement, we've seen just at that point that the reserve level need has come down. Okay. All right, you guys, thanks for the questions. Thank you, Will. The next question comes from David Bishop with Holder Group. Please go ahead. Yeah, good morning. Hey, I was wondering if I could circle back to Matt's question. Just curious, Kevin or Jim, if you knew or had offhand, what new rates on loan production were this quarter relative to last quarter, what you're seeing on that front? Good morning, Dave. So, I can give you a couple data points that are hopefully.

35. Okay. Got it. And then I may have missed at this beginning and apologies if so, you know, obviously a very strong production quarter. Just curious how the pipeline sort of compares exiting the quarter. Was that sort of dampened out? And are you seeing sort of any impact from, from higher rates impacting the, maybe the commercial real estate pipeline? Yeah. Hey, Dave, good morning. Yeah. We've seen a little bit of pullback in the pipeline, but. Honestly, it still remains a healthy pipeline. So it's a little bit of a pullback than what we saw compared to the beginning of Q3. But, but we still see, we're still having dialogue and conversations with customers. The pipeline hasn't gone to zero. And we continue to expect to have a, have a good quarter as we look at Q4. You know, with the holidays towards the end of the year, things may slow down a little bit, but just looking at our pipeline, our pipeline, our pipeline continues to remain healthy. Got it. And then, you know, Kevin, you know, obviously the opportunity, you know, sort of jumps off the page with the commercial acquisition on the deposit front. Any prospects to grow the loan book? Anything, any niches there, markets, they operate in that excite you from a loan growth perspective? Yeah. So, I think in a couple of areas. I mean, one, they just, they have a very similar, very granular loan portfolio. So, very similar to us. So, they'll absolutely be operating.

Opportunities that we can have or we can help enhance what they already do, you know, particularly from a consumer or a commercial side. We'll be able to manage larger relationships that maybe today they can't manage the full relationship. So, we think that there's, I say manage it from a balance sheet capacity standpoint. Not so much from a talent standpoint, but a balance sheet capacity standpoint. So, I think there's real opportunity to. To be able to complement one another, no different than how we've done in prior mergers. But just on a combined basis, be able to enhance, provide more opportunity from what Renasant would bring to the table, as well as complement what their team has there in Memphis. And the exciting thing about this is that we do overlap in Memphis with commercial. But there's still plenty of opportunity in that market where we won't be. Stepping on each other's toes. So expecting a good integration of both teams there in that one overlapping market in Memphis. And Dave, I'll add to, just like Kevin said, just expanding on a little bit, we did with the first. You know, the complementary lines of business we have that they don't offer, be that asset-based lending, SBA, factoring, we saw it with the first. The ability to leverage their C&I customer book into some of those specialty lines of business has paid huge dividends for us. And the... the expectation to come with the acquisition was commercial, would expect the same results. Got it. I guess one final question, certainly back to credit. I think the narrative noted one, credit driving the increase in charge-off provisions. Any color around that single credit? Thanks. Sure. Dave, we had recognized that as a problem loan back in Q1 of this year. So we've been carrying material level of impairment on that asset for a couple of quarters while we saw it too.

to fully value the assets. We received the value of those assets back in Q3. And so we went ahead and charged it down to what we believe to be the realizable value. It's a single credit in the CNI space. We view it to be a one-off transaction. And based on that valuation, we've written it down to our realizable value. Appreciate it. Thank you, Dave.

The next question comes from Jonathan Lee with TD Cohen. Please go ahead. Hi. Good morning. Good morning. Apologies if I missed, but in your expectations around Quornim improving a little bit, what is the cycle to date or through the cycle interest-faring deposit beta?

Um... And as we look at how that should change our growth projection... Right now, what we really see is it more just solidifying our outlook on that mid-single digit. And that's just not only loan growth, that's deposit growth as well. And gives us greater confidence that the opportunity to grow at a faster pace is there if we can get it at the proper spreads and under the proper credit underwriting terms. But again, just to kind of summarize the question, I still feel like we're in the middle innings, but... But where we are focusing has really been on the key type of revenue, and that's around wealth management, treasury...

Thanks for that. And if I could add just one more. Commercial deal makes a lot of sense. Small, strong core deposits, wealth angle. On M&A... When your ROTC was below peers, it was easier to see how M&A and CostSafe could help close that gap. And now that you're more in line with peers at that 15% to 16%, how has your thinking around M&A changed? What do you need to get out of a deal for it to create incremental value from here? Yeah, so one, I think all M&A is at a higher bar. Just looking at what the market opportunity... these are. And so as we looked at the opportunity to partner with commercial, that was one of our decisions to...one of the go, no-go decisions was, would this create a distraction? Would it take us away from our organic growth? And just given its size, given that it's really isolated in one area of our footprint, it will be...we'll go through a conversion, we'll go through an integration. We are not dismissing that. But we didn't that. We feel like it would be a broad-based distraction throughout the company. So the rest of our teams will continue to focus on just continuing to grow organically, capturing opportunity, capturing market share. But it does require a higher hurdle, M&A does, just given the, one, our baseline of where ROTC is today compared to in the past, but then also just the risk associated with the distraction. And it just... This requires a higher hurdle. Jim, any specifics you want to give as it relates to the impact on ROA, ROTC, or efficiency, just from the deal itself?

Yeah, I'd be happy to. So, Janet, on ROTC, these are fully, but that is about 70 basis points accretive to ROTC. Roughly five basis points accretive to NEM and five basis points to ROA. Thank you. Thank you, Janet. As a reminder, if you wish to register for a question, you may press star and one. Our next question is a follow-up from Matt Olney. Please go ahead.

Yeah. Hey, guys. Just a few follow-ups here. The accretion levels took a little step down this quarter. Jim, any color or guides you can provide on expectations for the accretion from here? Sure. And, Matt, I want to correct one thing I said to you earlier about core loan yields. So, in the quarter, we were at 6.08, and for the month of September, it was 6.11. I think I misspoke on that. But, yeah, on accretable yields, I would say this. You know, it's really difficult and challenging to predict the accelerated part of that. And with this, the backdrop of higher rates, you know, payoffs have probably been pushed out some. So, that's definitely affected that accelerated piece of accretable yield. And I think the way we're looking at Q4 is to maybe give you some numbers that might be helpful. I think total accretable yield would be around $10 million. That's our current sort of estimate. And about a million and a half of that would be accelerated. And clearly, the right environment will have a lot to do with this, but that accelerated piece will start to move itself down. And both pieces will, but the accelerated piece will probably move itself down during the course of 27. Okay. Thank you. That's helpful. And I appreciate that. As you said, not easy to predict there. And then just on the fee side, anything to call out? The fees look like mortgage is a little bit softer this quarter. Not a big surprise given what we've seen from some of your peers with higher rates. Any other thing to call out on the fee side? Any outlook there you can share? Thanks.

Sure. I would say the fee outlook for Q4 is for probably a little more softness. I think much of that's driven by mortgage. It's just a very challenging environment. There are a lot of good things going on within mortgage. We've made some really good hires in legacy renaissance markets, but also some of the new markets. But it's a difficult backdrop with rates where there are. So I think we're expecting mortgage to, again, be soft in Q4, and it's a seasonally tough quarter as well. So in terms of other income, I would think that what we'd see is largely probably a modest decline there, driven mainly by mortgage. We've not seen, you know, capital markets has been soft for us during the year. I think that's, you know, I think we hopefully will see some encouraging signs in the quarters ahead there that will see that line and grow. Wealth has been very stable, and we've had, you know, some low single-digit increases in wealth, and we expect that to continue.

Okay, thank you very much. Thank you, Matt. Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Kevin Chapman for any closing remarks. Thank you, George, and thank you to those that listened to our call this morning. We appreciate your interest in the company and look forward to meeting with you throughout the quarter. Thank you.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Goodbye.