Q3 2025 Renasant Corp Earnings Call

Speaker #4: Good day , and welcome to the Renaissance Corporation . 2025 Third Quarter Earnings Conference Call and Webcast . All participants will be in listen only mode .

Kelly Hutcheson: Good day, and welcome to the Renasant Corporation 2025 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 star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I'd now like to turn the conference over to Kevin Chapman. Please go ahead.

Speaker #4: Should you need assistance , please signal a conference presence by pressing the star key , followed by zero . After today's presentation , there will be an opportunity to ask questions , to ask a question , you may press star , then one on your telephone keypad .

Speaker #4: To withdraw your question , please press star . Then two . Please note this event is being recorded . I'd now like to turn the call over .

Speaker #4: Kelly Hutcheson . Please go ahead .

Speaker #5: 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 .

Kevin Chapman: Good morning, and thank you for joining us for Renasant Corporation's quarterly webcast and conference call. Participating in the call today are members of Renasant's 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, and other factors discussed in our recent filings with the Securities and Exchange Commission, including our recently filed earnings release, which has been posted to our corporate site, www.renasant.com, at the press releases link under the News and Market Data tab.

Speaker #5: Before we begin , please note that many of our comments during this call will be forward looking statements , which involve risks and uncertainty .

Speaker #5: 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 .

Speaker #5: 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 and other factors discussed in our recent filings with the Securities and Exchange Commission , including our recently filed earnings release , which has been posted to our corporate site .

Speaker #5: W-w-w-w-wait at the press releases link under the News and Market Data tab . We undertake no obligation and we specifically disclaim any obligation to update or revise forward looking statements to reflect changed assumptions .

Kevin Chapman: We undertake no obligation, and we specifically disclaim any obligation to update or revise 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 to the most comparable GAAP measures can be found in our earnings release. Now, I will turn the call over to our President and Chief Executive Officer, Kevin Chapman.

Speaker #5: 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.

Speaker #5: A reconciliation of the non-GAAP measures to the most comparable GAAP measures can be found in our earnings release . And now I will turn the call over to our president and Chief Executive Officer , Kevin Chapman .

Speaker #6: Thank you , Kelly , and good morning . We appreciate you joining the call and look forward to sharing results for the quarter .

Kevin Chapman: Thank you, Kelly, and good morning. We appreciate you joining the call and look forward to sharing results for the quarter. Renasant's financial performance in the third quarter reflects good loan growth and profit improvement that keeps us on the path to meet the financial goals of the merger. The integration with The First Bancshares continues to go well. Systems conversion took place in early August, and I believe we have made great strides in operating as one team. As you know, in July 2024, Renasant and The First Bancshares announced a partnership that would maximize our strengths and create a high-performing Southeast bank. At that time, we established profitability goals related to return on assets, return on tangible common equity, and our efficiency ratio. We knew that the third quarter of 2025 would be an important measuring stick for our progress against these expectations.

Speaker #6: Renaissance financial performance in the third quarter reflects good loan growth and profit improvement that keeps us on the path to meet the financial goals of the merger .

Speaker #6: The integration with the first continues to go well . Systems conversion took place in early August and I believe we have made great strides in operating as one team , as you know , in July 2024 , Renasant and the first announced a partnership that would maximize our strengths and create a high performing southeast bank .

Speaker #6: At that time , we established profitability goals related to return on assets , return on tangible common equity , and our efficiency ratio .

Speaker #6: We knew that the third quarter of 2025 would be an important measuring stick for our progress against these expectations . Q3 results position us to achieve our goals .

Kevin Chapman: Q3 results position us to achieve our goals. Additionally, it is very gratifying to see our team, despite going through the largest conversion either company has gone through, produce loan growth of almost 10% during the quarter. I want to thank all of our employees for their tremendous effort this quarter in completing systems conversion while continuing to understand and meet the needs of our customers. I will now highlight financial results for the quarter. The company's net income was $59.8 million or $0.63 per diluted share. Adjusted earnings, excluding merger charges, were $72.9 million or $0.77 per diluted share. Loans were up $462 million on a linked quarter basis or 9.9% annualized. Deposits were down $158 million from the second quarter, which was driven by a seasonal decrease in public funds of $169 million on a linked quarter basis.

Speaker #6: Additionally , it is very gratifying to see our team , despite going through the largest conversion either company has gone through , produced loan growth of almost 10% during the quarter .

Speaker #6: I want to thank all of our employees for their tremendous effort this quarter , and completing systems conversion while continuing to understand and meet the needs of our customers .

Speaker #6: I will now highlight financial results for the quarter . The company's net income was $59.8 million , or $0.63 per diluted share . Adjusted earnings , excluding merger charges , were $72.9 million , or $0.77 per diluted share .

Speaker #6: Loans were up $462 million on a linked quarter basis , or 9.9% annualized . Deposits were down $158 million from the second quarter , which was driven by a seasonal decrease in public funds of $169 million on a linked quarter basis .

Speaker #6: Reported net interest margin was flat at 3.85%, while the adjusted margin was up four basis points to 3.62% on a linked quarter basis.

Kevin Chapman: Reported net interest margin was flat at 3.85%, while adjusted margin was up four basis points to 3.62% on a linked quarter basis. Our adjusted total cost of deposits increased by four basis points to 2.08%, while our adjusted loan yields increased five basis points to 6.23%. We look forward to seeing additional profitability improvements in upcoming quarters as efficiency savings are realized. I will now turn the call over to Jim.

Speaker #6: Our adjusted total cost of deposits increased by four basis points to 2.08% , while our adjusted loan yields increased five basis points to 6.23% .

Speaker #6: We look forward to seeing additional profitability improvements in upcoming quarters as efficiency savings are realized. I will now turn the call over to Jim.

Speaker #7: Thank you . Kevin , and good morning . As Kevin mentioned , we are encouraged by the integration efforts of our employees and the positive impact on results this quarter .

Kelly Hutcheson: Thank you, Kevin, and good morning. As Kevin mentioned, we are encouraged by the integration efforts of our employees and the positive impact on results this quarter. Our adjusted return on average assets of 1.09% for the quarter is an improvement of 12 basis points from a year ago, and our adjusted return on tangible common equity of 14.22% for the quarter is an improvement of 296 basis points. From a capital standpoint, all regulatory capital ratios remain in excess of required minimums to be considered well-capitalized. We record a credit loss provision on loans of $10.5 million, comprised of $9.7 million for funded loans and $0.8 million for unfunded commitments. Net charge-offs were $4.3 million, and the ACL as a percentage of total loans declined one basis point quarter over quarter to 1.56%. Turning to the income statement, our adjusted pre-provision net revenue was $103.2 million.

Speaker #7: Our adjusted return on average assets of 1.09% for the quarter is an improvement of 12 basis points from a year ago . And our adjusted return on tangible common equity of 14.22% for the quarter is an improvement of 296 basis points from a capital standpoint , all regulatory capital ratios remain in excess of required minimums to be considered .

Speaker #7: Well capitalized . We record a credit loss provision on loans of $10.5 million , comprised of $9.7 million for funded loans and $800,000 for unfunded commitments .

Speaker #7: Net charge offs were $4.3 million , and the ACL is a percentage of total loans declined one basis point quarter over 12:45 .56 percent .

Speaker #7: Turning to the income statement , our adjusted Pre-provision net revenue was $103.2 million , net interest income growth was driven by the improvement in the net interest margin and loan growth .

Kelly Hutcheson: Net interest income growth was driven by the improvement in the net interest margin and loan growth. Non-interest income was $46 million in the third quarter, a linked quarter decrease of $0.841 million, excluding the gain on sale of MSR assets in Q2. Non-interest expense was $183.8 million for the third quarter. Excluding merger and conversion expenses of $17.5 million, non-interest expense was $166.3 million for the quarter, a linked quarter increase of $3.6 million. With systems conversion now complete, we expect modeled synergies to be more evident in our results going forward. Regarding conversion-related expenses, we believe a majority have been recorded through the third quarter, with a modest amount expected to come in the fourth quarter. There was a decline in our adjusted efficiency ratio of about 0.4 percentage points, and we expect to see additional improvements in the coming quarters.

Speaker #7: Non-interest income was $46 million in the third quarter , a linked quarter decrease of $841,000 . Excluding the gain on sale of MSR assets in Q2 , non-interest expense was $183.8 million for the third quarter .

Speaker #7: Excluding merger and conversion expenses of $17.5 million , non-interest expense was $166.3 million for the quarter . A linked quarter increase of $3.6 million , with systems conversion now complete , we expect modeled synergies to be more evident in our results going forward .

Speaker #7: Regarding conversion related expenses , we believe a majority have been recorded through the third quarter with a modest amount expected to come in the fourth quarter .

Speaker #7: There was a decline in our adjusted efficiency ratio of about 0.4 percentage points , and we expect to see additional improvements in the coming quarters .

Speaker #7: We are encouraged by the results of the third quarter and the positive momentum going into the fourth quarter . I will now turn the call back over to Kevin .

Kelly Hutcheson: We are encouraged by the results of the third quarter and the positive momentum going into the fourth quarter. I will now turn the call back over to Kevin.

Speaker #6: Thank you . Jim . We look forward to closing out a successful year for Renasant . We have come a long way on our goal of improving profitability .

Kevin Chapman: Thank you, Jim. We look forward to closing out a successful year for Renasant. We have come a long way on our goal of improving profitability. The combination of a strong balance sheet plus added profitability puts us in a position to capitalize on opportunities in our vibrant banking footprint. I will now turn the call over to the operator for questions.

Speaker #6: The combination of a strong balance sheet plus added profitability puts us in a position to capitalize on opportunities in our vibrant banking footprint .

Speaker #6: I will now turn the call over to the operator for questions .

Speaker #4: Yes . Thank you . We will now begin the question and answer session . To ask a question , you may press star then one on your telephone keypad .

Operator: Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your headset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble the roster. The first question comes from Stephen Scouten with Piper Sandler.

Speaker #4: If you are using a speakerphone , please pick up your handset before pressing the keys . If at any time your questions may be addressed and you would like to withdraw it , please press star then two .

Speaker #4: At this time , we will pause momentarily to assemble the roster . And the first question comes from Stephen Scott with Piper Sandler .

Speaker #8: Hey , good morning everyone . Really nice quarter here . Loan growth was particularly encouraging . Can you give any color around what you're seeing from a pipeline perspective ?

[Analyst]: Hey, good morning, everyone. Really nice quarter here. Loan growth was particularly encouraging. Can you give any color around what you're seeing from a pipeline perspective and maybe also around, specifically the legacy SBMS markets, maybe in and around the Gulf Coast? You know, potential strength you're seeing there that's helping fuel this strong growth?

Speaker #8: And maybe also around specifically the legacy Sdms markets ? Maybe in and around the Gulf Coast , you know , potential strength you're seeing there that's helping fuel the strong growth ?

Speaker #6: Yeah . Hey . Good morning . It's Kevin . So so yeah , we . Looking at loan growth for the quarter I know we've we've been guiding more towards you call it the mid-single digits .

Kevin Chapman: Yeah, hey, Stephen, good morning. This is Kevin. Looking at loan growth for the quarter, I know we've been guiding more towards, you know, call it the mid-single digits because we've been expecting payoffs to increase. Our production has been there all year long. I think for Q1, Q2, we've been more in the 7% range if you look at the net loan growth. Again, this looming potential of payoffs, it feels like it continues to be out there. Getting to the current quarter, what I tell you, what we're excited about is the growth happened all throughout our footprint.

Speaker #6: Because we've been expecting payoffs to increase our production has been there all year long I think for Q1 , Q2 , we've been more in the 7% range .

Speaker #6: If you look at the at the net loan growth , again , this looming potential of payoffs , can you it feels like it continues to be out there .

Speaker #6: But getting to the current quarter , what I tell you what we're excited about is the growth happened all throughout our footprint . Whether you look at it as a breakdown from a geography , whether you look at it from , say , our our credit channels , whether it's our small business lending units , our , our , our , our business banking lending units , or even some of our larger units like corporate or our commercial lending units , all categories we saw good distributed growth in all of them .

Kevin Chapman: Whether you look at it as a breakdown from a geography, whether you look at it from, say, our credit channels, whether it's our small business lending units, our business banking lending units, or even some of our larger units like corporate or commercial lending units, all categories, we saw good distributed growth in all of them. Even if you break it down by asset classes, we saw good growth. Going to where we were, back in July of 2024, when we contemplated merging with The First Bancshares, one thing we thought we could do is unlock some potential in both companies. I think Q3 is indicating.

Speaker #6: And even if you break it down by asset classes , we saw good growth . So you know , going to where we were back in July of 24 when we when we contemplated merging with the first one , one we thought we could do is unlock some potential in both companies .

Speaker #6: I think Q3 is indicated.

Speaker #4: Yes . Please stand by . The conference will resume .

Operator: Yes, please stand by. The conference floor is up.

Speaker #6: And ? Specific to the first and . And the and the Gulf Coast . What ? What we've seen is we've seen good growth there as well .

Kevin Chapman: Specific to The First Bancshares and the Gulf Coast, what we've seen is we've seen good growth there as well. The opportunities that Renasant Corporation can provide to The First Bancshares lenders with being able to expand relationships now that they have a little bit bigger balance sheet. We have a bigger balance sheet. We have more lending capabilities or the ability to do specialized lending with some of our secured lending lines. That team has immediately gravitated to it, has made referrals, and we've seen immediate successes as a result of, again, the combination. As we look, we're excited about what Q3 indicates, how we're positioned. I think we've got the opportunity to continue growth in Q4 and beyond.

Speaker #6: And the the opportunities that that Renasant can provide to the first lenders . With with with being able to , to expand relationships now that they have a little bit bigger balance sheet , we have a bigger balance sheet , we have more lending capabilities or the ability to do specialized lending with with some of our secured lending lines .

Speaker #6: That team has immediately gravitated to . It has made referrals , and we've seen immediate successes as a result of , again , the combination so , so again , as we look , we're excited about what we're excited about , what Q3 indicates , how we're positioned .

Speaker #6: And and again , I think I think we've got we've got the opportunity to continue growth in Q4 and beyond .

Speaker #8: Great. I appreciate that color, Kevin. Maybe just curious about the pace of expense savings from here, kind of how much maybe you've been able to extract so far and what we could think about in terms of further expense savings from the deal, and kind of the path as we maybe look at a good one.

[Analyst]: Great. Appreciate that color, Kevin. Maybe just curious about pace of expense saves from here, kind of how much maybe you've been able to extract so far and kind of what we could think about in terms of further expense saves from the deal and kind of the path as we maybe look at a good Q1 2026 run-rate, that sort of thing.

Speaker #8: Q3 run rate, that sort of thing.

Speaker #7: Good morning Stephen . It's Jim . So just just a touch on Q3 for a second . So you saw in core Knee we were up about $3 million ex the you know the merger expenses and our , our and I would say actually let me comment on the increase in what we saw in Q3 .

James Mabry: Good morning, Stephen. It's Jim. Just to touch on Q3 for a second, you saw in core NIE, we were up about $3 million, excluding the merger expenses. I would say, actually, let me comment on the increase in what we saw in Q3. There were three buckets where we saw the increase, and they were about equally weighted. You had an increase in health and life, you had an increase in occupancy, and you saw an increase in health and life occupancy in the FAS 91. Two of those are sort of uncontrollable, so we'll see how those play out in future quarters. As it relates more particularly to your question, our sense is that in Q4, we'll see about a $2 or $3 million decrease in core NIE for Q4, and then another $2 or $3 million decrease in core NIE in Q1.

Speaker #7: It was . There were three buckets where we saw the increase and there were about equally weighted . You had an increase in health and life .

Speaker #7: You had an increase in and and occupancy , and you saw an increase in . Health and life occupancy . And was 91 .

Speaker #7: So two of those are sort of uncontrollable . So we'll see how those play out in future quarters . But as it relates more particularly to your question , our , our sense is that in Q4 , we'll see about a 2 or $3 million decrease in core knee for for Q4 .

Speaker #7: And then another 2 or $3 million decrease in core knee and Q1 .

Speaker #8: Okay , fantastic . That's really helpful . Jim . And then just lastly , for me , I really appreciate how you guys broke out , kind of accretion in your slide deck .

[Analyst]: Okay. Fantastic. That's really helpful, Jim. Lastly for me, I really appreciate how you guys broke out kind of accretion in your slide deck. What's kind of a good baseline assumption of the normal accretion expected? Is it around that? I guess it was $12.4 million. Is that right? Or maybe the interest rate component of that was about $9.8 million, if I'm doing the math right. Is that a good way to think about forward accretion?

Speaker #8: What's kind of a good baseline assumption of the normal accretion expected? Is it around that? I guess it was $12.4 million.

Speaker #8: Is that right ? Or maybe maybe the interest rate component of that was about 9.8 ? If I'm doing the math right , is that is that a good way to think about forward accretion ?

Speaker #7: Well , it obviously is going to vary at least the accelerated part is going to vary given . You know , loan prepayments .

James Mabry: It obviously is going to vary. At least the accelerated part is going to vary given loan prepayment. It's a hard thing to predict, but I think that scheduled accretion is going to track pretty closely to what you saw in Q3.

Speaker #7: So it's a it's a hard thing to predict . But I think that scheduled accretion is going to track pretty closely to what you saw in Q3 .

Speaker #8: Perfect . Thanks so much for the color . Appreciate the time , guys .

[Analyst]: Perfect. Thanks so much for the color. Appreciate the time, guys.

Speaker #6: Thanks , Stephen .

Kevin Chapman: Thanks, Steven.

Speaker #4: Thank you . And the next question comes from Matt Olney with Stephens .

Operator: Thank you. The next question comes from Matt Olney with Stevens.

Speaker #9: Hey, thanks. Good morning, everybody. I want to ask more about that core margin in the third quarter. I saw some good expansion with that.

[Analyst]: Hey, thanks. Good morning, everybody. Want to ask more about that core margin in the third quarter. Saw some good expansion with that. Any more color on the drivers of that expansion? I guess if we look forward, I think you mentioned on a previous call that you thought a core margin would maybe flatten out as we got towards the fourth quarter. Is that still the view of the fourth quarter core margin? Thanks.

Speaker #9: Any any more color on the drivers of that expansion . And then I guess if we look forward , I think you mentioned on a previous call that you thought it could core margin would maybe flatten out as we got towards the fourth quarter .

Speaker #9: Is that is that still the view of the of the fourth quarter ? Core margin ? Thanks .

Speaker #7: Good morning Matt . This is Jim . So yes , we were pleased to see a little expansion in Q3 . Looking forward , I would say in Q4 probably some modest contraction in the margin in Q4 .

James Mabry: Good morning, Matt. This is Jim. Yes, we were pleased to see a little expansion in Q3. Looking forward, I would say in Q4, probably some modest contraction in the margin in Q4. For 2026, I would say, you know, modest expansion. Not a lot of change, but that would be a general outlook. That assumes four rate cuts between now and year-end of 2026.

Speaker #7: And then for 26 , I would say , you know , modest expansion . So not a lot of change , but that would be a general outlook .

Speaker #7: And that assumes for rate cuts between now and year end of 26 .

Speaker #9: Just to clarify , you said that assumes for rate cuts between between including today , I assume between now and the end of next year , is that right ?

[Analyst]: Just to clarify, you said that assumes four rate cuts, including today, I assume, between now and the end of next year. Is that right?

Speaker #10: That's correct .

Speaker #7: That's correct .

James Mabry: That's correct. That's correct.

Speaker #9: Okay . Okay . That's helpful . Thanks for that . And then I guess switching over to to credit quality , we did see criticized loans jump up in the third quarter .

[Analyst]: Okay. That's helpful. Thanks for that. I guess switching over to credit quality, we did see criticized loans jump up in the third quarter. Any color on the driver of that jump up of criticized loans?

Speaker #9: Any color on the driver of that jump up of criticized loans?

Speaker #10: Hey Matt good morning . This is this is David . So it was it was a broad based increase for the quarter . There was a little bit of commercial real estate , a little bit of CNI .

James Mabry: Hey, Matt. Good morning. This is David. It was a broad-based increase for the quarter. There was a little bit of commercial real estate, a little bit of CNI. If we get into the weeds a little bit, we had a single multifamily transaction that does make up about a quarter of it that we feel very strong. This good asset just was underperforming relative to our original budget. We expect that loan to pay off in the ordinary course probably early 2026. We had two CNI transactions that made up roughly a third of that number. One of them is the tricolor credit that we've talked about that made up a large percentage of that asset type. A little bit of migration in our self-storage portfolio, and then a little bit of migration in one asset in our senior housing. It was broad-based within our downgrades for criticized.

Speaker #10: If we get into the weeds a little bit , we had a single multifamily transaction that make up about a quarter of it that we feel very strong .

Speaker #10: That's good asset . Just was underperforming relative to our original budget . We expect that loan to pay off in the ordinary course .

Speaker #10: Probably early 26 . We had two CNI transactions that made up roughly a third of that number . One of them is is the truckload credit that we've we've talked about that made up a large percentage of that asset type , a little bit of migration in a self storage portfolio and then a little bit of migration in one asset in our senior housing .

Speaker #10: So it was it was broad based within our , our downgrades to criticized . We don't feel that we have any loss exposure in that in that increase .

James Mabry: We don't feel that we have any loss exposure in that increase, but it's broad-based. Matt, I know you know we do a fairly aggressive job of looking at our loan portfolio from the health portfolio, risk-rating loans proactively to make sure we're identifying risks so we can find those loans and migrate them out of the bank as quick as possible. I think that's just a testament to our early identification of problem loans so we can manage them proactively.

Speaker #10: But it's broad based . And Matt I know you know we do a fairly aggressive job of looking at our loan portfolio from the health portfolio risk rating loans proactively to make sure we're identifying risks so we can find those loans and migrate them out of the bank as quick as possible .

Speaker #10: So I think that's just a testament to our early identification of problem loans, so we can manage them proactively.

Speaker #9: Yeah . Okay . Well thanks for the update guys .

[Analyst]: Yeah. Okay. Thanks for the update, guys.

Speaker #6: Thank you . Thank you Matt .

James Mabry: Thank you.

Kevin Chapman: Thank you, Matt.

Speaker #4: Thank you . And the next question comes from Michael Rose with Raymond James .

Operator: Thank you. The next question comes from Michael Rose with Raymond James.

Speaker #8: Hey good .

Speaker #11: Morning guys . Thanks for taking my questions . Just on the on the on the new buyback that you guys announced . Good to see you guys are going to be building capital , but you haven't bought back really any stock since 2021 .

[Analyst]: Hey, good morning, guys. Thanks for taking my questions. Just on the new buyback that you guys announced, you know, good to see you guys are going to be building capital, but you haven't bought back really any stock since 2021. Just wanted to see where that currently plays in your thought process, particularly given the fact that you've, you know, just here recently completed a deal. There's probably other deals out there. It seems like the environment's good. Just wanted to kind of run down the thought process on capital as we move forward. Thanks.

Speaker #11: Just wanted to see where that currently plays in . In your thought process particularly given the fact that you've , you know , just here recently completed a deal .

Speaker #11: There's there's probably other deals out there . It seems like the environment's good . Just , just wanted to kind of run down the thought process on capital as we move forward .

Speaker #11: Thanks .

Speaker #7: Good morning Michael , it's Jim . So you know the third quarter was an important quarter for us because we obviously got the deal closed .

James Mabry: Good morning, Michael. It's Jim. The third quarter was an important quarter for us because we obviously got the deal closed, and that was reflected in Q2. To go through systems conversion and just see Q3 come out like it did, and of course, Kevin's comments I thought were spot on. It was just really nice to see all that momentum that we've got and the fact that our teams remain focused. I say that because I think it's important to have that backdrop as we think about capital because we feel like we've got pretty good visibility into Q4 and into 2026 in terms of the prospects for us to continue to grow that capital. Our sense is that we could grow those capital ratios anywhere between 60% and 70% basis points between now and year-end 2026. The capital levers, including buyback, are much more in focus for us.

Speaker #7: And that was reflected in Q2 . And then to go through systems conversion and just see Q3 come out like it did . And of course Kevin's comments , I thought were spot on .

Speaker #7: I mean , we just really nice to see all that momentum that we've got and the fact that our teams remain focused and I say that because I think it's I think it's important to have that backdrop as we think about capital , because we I think we feel like we've got a pretty good we've got pretty good visibility into Q4 and into 26 in terms of the prospects for us to continue to grow that capital , our our sense is that we could grow those capital ratios anywhere between 16 and 70 basis points between now and year end , 26 .

Speaker #7: And so the capital levers , including buyback , are much more in focus for us . And we are putting a lot of thought into that .

James Mabry: We are putting a lot of thought into that. I think we are mindful of the fact that we're going to have a growing capital base. We've taken a couple of steps here recently. One, notably, right after the quarter, we redeemed $60 million of sub debt. You saw the dividend announcement, the common dividend announcement. We wanted to think about that authorization. One of the reasons we increased it is just proportionate. We're 50% larger in terms of market cap and capital, but also it's a lever that we're increasingly inclined to think about. I think whether it's the buyback, supporting organic growth, which of course has been strong, remains the number one goal. We're going to bear down on uses of capital. I think buyback is certainly high on that list in terms of levers we might pull in the coming quarters.

Speaker #7: And , and I think our , our mindful of the fact that we're going to have a growing capital base , we've taken a couple of steps here recently .

Speaker #7: One notable event right after the quarter was the redemption of $60 million of subordinated debt. You also saw the common dividend announcement.

Speaker #7: So and we wanted to we wanted to think about that authorization . And one of the things one of the reasons we increased it is just proportionate .

Speaker #7: I mean , we're 50% larger in terms of market cap and capital , but also it's a lever that we're increasingly inclined to think about .

Speaker #7: So I think whether it's it's the buyback supporting organic growth , which of course has been strong , remains the number one goal .

Speaker #7: But we're going to we're going to bear down on uses of capital and and I think buyback is certainly high on that list in terms of levers .

Speaker #7: We might pull in the coming quarters .

Speaker #11: Very helpful . And then maybe if I can just ask a question on on deposits . You guys want a deposit ratios . Now kind of approaching 90% .

[Analyst]: Very helpful. Maybe if I can just ask a question on deposits. You guys' loan to deposit ratios now kind of approaching 90%. It's the highest it's been since basically the beginning of COVID. Can you just talk about some of the deposit growth strategy? I know there's always some seasonality with muni deposits too, but the general trend has been upward over the past few years. Just wanted to get a better sense of your plans for deposit growth, juxtaposed with the rate environment. Thanks.

Speaker #11: It's the highest it's been since basically the beginning of COVID. Can you just talk about some of the deposit growth strategy? I know there's always some seasonality with deposits too, but the general trend has been upward over the past.

Speaker #11: You know , over the past few years . And just just wanting to get a better sense of , you know , your plans for deposit growth , you know , juxtaposed with the with the rate environment .

Speaker #11: Thanks .

Speaker #7: I think we've been we've been spoiled because I think out of the last ten quarters , we've had deposit growth that's equaled or better or better loan growth .

James Mabry: I think we've been spoiled because I think out of the last 10 quarters, we've had deposit growth that's equaled or better, or better loan growth. To not have that in a quarter is a certain something that caught our attention. As you point out, a lot of it was seasonal. It had to do with public funds. Our goal is to grow deposits, core deposits in line with loan growth. That remains a focus of ours in the way we incentivize our teams, the way we motivate our teams. As we go forward in 2026, we want that core deposit growth to equal whatever loan growth we produce.

Speaker #7: And so to not have that in a quarter is certainly something that caught our attention . But as you point out , a lot of that was seasonal .

Speaker #7: I had to do with public funds and our our , our goal is to grow deposits , core deposits in line with with loan growth .

Speaker #7: And that remains a focus of ours . And the way we incentivize our teams , the way we motivate our teams . And so as as we go forward in 26 , we want that core deposit growth to equal whatever loan growth we produce .

Speaker #7: It look , as we look Q4 , some of the public outflows that we saw in Q3 , there might be just given the seasonality .

James Mabry: As we looked at Q4, some of the public fund outflows that we saw in Q3, there might be, just given the seasonality of the way some of the municipalities behave, we could see some of that come back in the latter part of Q4. We'll see how that plays out. I would tell you the funding, loan growth remains a top priority here. We know we can generate deposits. We've got a great record of doing that. It's a focus of the company, whether it's this quarter or next quarter or for the next decade. That is a paramount focus at Renasant Corporation to grow the deposit base regardless of what loan growth is.

Speaker #7: Otherwise , some of the municipalities behave . We could see some of that come back in the latter part of Q4 . So we'll see how that plays out .

Speaker #7: But I would tell you , the funding loan growth remains a top priority here , and we know we can generate deposits . We've got a great record of doing that .

Speaker #7: And it's a focus of the company , whether it's this quarter or next quarter , for the next , you know , decade , that that is a paramount focus that runs on to grow the deposit base regardless of what loan growth is .

Speaker #11: Really appreciate the color . Maybe if I could just sneak one last one in , I appreciate the near term . You know , color on on expenses .

[Analyst]: I really appreciate the color. Maybe if I could just sneak one last one in. I appreciate the near-term color on expenses. I know it's something we all struggle with in modeling as we go through a deal, especially the size. Just as we think about the combined franchise now that systems conversion has happened, are there other areas and levers that you guys can pull to generate the positive operating leverage as we move forward? I'm just trying to better appreciate some of the opportunities maybe at Legacy Renasant now that you have the cost saves from the deal and the accretion from the deal. Thanks.

Speaker #11: I know that's something we all struggle with in modeling as we go through a deal , especially if the size . But just as we think about kind of the combined franchise , now that systems conversion has happened , you know , are there other areas and levers that you guys can pull to kind of , you know , generate the positive operating leverage as we as we kind of move forward ?

Speaker #11: I'm just just trying to better appreciate , you know , some of the opportunities maybe at Legacy Renaissance , now that you have the the costs from the deal and the the accretion from the deal , thanks .

Speaker #6: Yeah . Hey , Michael . Kevin and I so the short answer is yes . Right . If we go back 16 , 18 months ago , Renaissance on standalone basis , the first on standalone basis , both of us were were looking at either adding expenses for the assets where we were at or we needed scale for the assets , for the expenses .

Kevin Chapman: Yeah. Hey, Michael, Kevin, the short answer is yes, right? If we go back 16, 18 months ago, Renasant on a standalone basis, The First on a standalone basis, both of us were looking at either adding expenses for the assets where we were at, or we needed scale for the assets, for the expenses that in infrastructure we had built. Combining both companies unlocked potential. I think we laid out some goals when we launched this of, you know, an ROA in the 120s, mid-teens ROE, and a mid-50s efficiency ratio. I think, again, if you saw it in Q2, you see it in Q3, we are right on top and on path to meet those goals. As we've talked about or as we've tried to communicate, that's not where we're stopping.

Speaker #6: That and infrastructure we had built . So combining both companies unlock potential , and I think we laid out some goals when we launched this of , you know , an ROA in the one 20s , mid-teens .

Speaker #6: ROE and a mid 50s efficiency ratio . And I think again , if you saw it in Q2 , you see it in Q3 .

Speaker #6: We are right on top . And on on path to meet those goals . But as we've talked about or as as we've tried to communicate , that's not where we're stopping .

Speaker #6: There's real momentum in the company , not only around expenses , but driving higher levels of profitability on our expenses . So that operating leverage , that's there is going to continue to come in two places .

Kevin Chapman: There's real momentum in the company, not only around expenses, but driving higher levels of profitability on our expenses. That operating leverage that's there is going to continue to come in two places. It'll come from discipline and management on the expense side, but it's also going to be getting the right return on the expenses we have. We've had probably above-average loan growth now for a couple of quarters. We want to have above-average loan growth. It doesn't have to be, you know, 20% loan growth. It just needs to be a couple of multiples above the average so that we can get the scale, so we can get the revenue that's generated off those expenses. That's been an effort that's been ongoing, I know, on the Renasant. Now I think you're seeing it on the combined company.

Speaker #6: It'll come from from discipline and management . On the expense side . But it's also going to be getting the right return on the expenses .

Speaker #6: We have . So we've had we've had probably above average loan growth now for a couple of quarters . We want we want to have above average loan growth .

Speaker #6: It doesn't have to be , you know , 20% loan growth . It just needs to be a couple of multiples above , above the average so that we can get the scale .

Speaker #6: So we can get the revenue that's generated off those expenses. And that's been an effort that's been ongoing. I know on the Renaissance.

Speaker #6: And now I think you're seeing it on the combined company , but there's still going to be a continued effort to look at our expenses , create efficiencies , accountability is , is , is is prevalent all throughout the company .

Kevin Chapman: There's still going to be a continued effort to look at our expenses, create efficiencies. Accountability is prevalent all throughout the company, and we hold each other accountable. The expectations for the company internally have been raised, I would say, further than where expectations are for external estimates. We really, the momentum we have around our financial performance and our focus, and that leads with profitability, that has been embraced by the company. I think it's unleashed some pent-up excitement, pent-up demand within the company as we're achieving the success that we felt we could achieve. The operating leverages will be not only on the expense side, but it's also going to come on the revenue side. You know, our provision was elevated this quarter, not because of credit, but because we had twice the loan growth we thought we were going to have.

Speaker #6: And we hold each other accountable . But the expectations for the company internally have been raised . I would say further than where expectations are for external estimates .

Speaker #6: And and so we we really the momentum we have around our financial performance and our focus and and that leads with profitability that has been embraced by the company .

Speaker #6: And I think it's unleashed some some pent up excitement , pent up demand within the company as we start , as we're achieving the success that we felt we could achieve .

Speaker #6: So the operating leverages will be not only on the expense side, but it's also going to come on the revenue side.

Speaker #6: You know , our provision was elevated this quarter not because of credit , but because we had twice the loan growth . We thought we were going to have .

Speaker #6: So that that revenue that's going to come from that above average loan growth is going to be there in the future quarters . And that's what excites us about the past couple of quarters and some of the balance sheet growth that we've had is it's in line with our plan and really kind of re-emphasizes what we thought could happen , combining both Renaissance in the first is unlocking some of that potential that was there , unlocking it on a combined when we combined as opposed to us , us not being able to unlock it or struggle a little bit if we remained independent .

Kevin Chapman: That revenue that's going to come from that above-average loan growth is going to be there in the future quarters. That's what excites us about the past couple of quarters and some of the balance sheet growth that we've had. It's in line with our plan and really kind of reemphasizes what we thought could happen combining both Renasant and The First is unlocking some of that potential that was there, unlocking it on a combined when we combined as opposed to us not being able to unlock it or struggle a little bit if we remained independent.

Speaker #11: I appreciate all the color guys . Thanks for taking my questions .

[Analyst]: I appreciate all the color, guys. Thanks for taking my questions.

Speaker #6: Thank you . Michael .

Kevin Chapman: Thank you, Michael.

Speaker #4: Thank you . And the next question comes from Dave Bishop with Hufty Group .

Operator: Thank you. The next question comes from David Bishop of the Hubday Group.

Speaker #12: Hey .

Speaker #8: .

Speaker #12: Good morning gentlemen .

[Analyst]: Hey, good morning, gentlemen.

Speaker #13: Good morning Kevin . Hey Kevin , quick question in the preamble . It sounded like maybe you were surprised in terms of the lack of payoffs , this quarter and maybe last .

James Mabry: Good morning, David.

[Analyst]: Hey, Kevin, quick question. In the preamble, it sounded like maybe you were surprised in terms of the lack of payoffs this quarter and maybe last. Just curious if you have like line of sight into potential payoffs into the next quarter. If they didn't occur, maybe what's delaying them or are there bars sort of waiting for lower rates? Just curious if there's any way to ring-fence maybe potential headwinds into the coming quarter or next, if that's possible.

Speaker #13: Just curious if you have , like , line of sight into potential payoffs into the next quarter , and if they didn't occur , maybe what's delaying or are there borrowers sort of waiting for lower rates ?

Speaker #13: Just curious if there's any way to ring fence , maybe potential headwinds into the coming quarter or next if that's possible .

Speaker #6: Yeah . So yeah . No , it is . We to be honest with you , we are I am and I think we are a little bit surprised that payoffs have been a little bit muted .

Kevin Chapman: Yeah, no, it is. To be honest with you, we are, I am, and I think we are a little bit surprised that payoffs have been a little bit muted. We've also been, we've set an indicator that we've been looking at, which is the 10-year. If the 10-year, as it approached 4% or dropped below 4%, we think the risk of prepayments, payoffs for us increase. Q3, I don't know the exact number on the 10-year, but it was probably in the 410s or the 420s and didn't really approach the 4% range until we got into October.

Speaker #6: But but we've also been we we've set an indicator that we've been looking at at the ten year , the ten year as it approached 4% or dropped below 4% .

Speaker #6: We think the risk of of prepayments payoffs for us increase Q3 the I don't know the exact number on the ten year , but it was it was probably in the 14 or the four 20s and didn't didn't really approach the 4% range until we got into October .

Speaker #6: So as we look at , say , fourth quarter , we are more focused on and ensuring that we have good line of sight into customers .

Kevin Chapman: As we look at, say, fourth quarter, we are more focused on ensuring that we have good line of sight into customers, our lenders getting updates as to where potential payoffs, prepayments could occur, only because we had set towards the end of last year, beginning of this year, that a 4% 10-year is an important benchmark for us, that as we approached it or we got below it, that could elevate payoffs in our commercial real estate book.

Speaker #6: Our lenders getting updates as to where potential payoffs , prepayments could occur only because we had set towards the end of last year , beginning of this year , that that 4% ten year is an important benchmark for us , that as we approached it or we got below it , that could elevate payoffs in our commercial real estate book .

Speaker #13: Got it . And then obviously you're cognizant of the significant amount of M&A activity in your backyard or backyard , so to speak .

[Analyst]: Got it. Obviously, you're cognizant of the significant amount of M&A activity in your backyard or backyards, so to speak. Just curious how aggressive you think you're going to be in terms of recruiting some of that talent and commercial clients that could dislodge from those acquisitions. Is the opportunity set big enough to, I know the first merger just closed, but is the opportunity there to sort of replace whole bank M&A with lift out of talent? Thanks.

Speaker #13: Just curious . You know , how aggressive you think you're going to be in terms of recruiting some of that talent and commercial clients that could dislodge from those acquisitions ?

Speaker #13: And , you know , is the opportunity set big enough to , know the first merger just closed . But is the opportunity there to sort of replace whole bank M&A with lift out of talent ?

Speaker #13: Thanks .

Speaker #6: Yeah . So so David , I'm not sure it replaces it , but it provides an interesting and unique opportunity for us . And in some cases there may be there may be opportunity to hire with some of the overlap .

Kevin Chapman: Yeah. David, I'm not sure it replaces it, but it provides an interesting and unique opportunity for us. In some cases, there may be opportunity to hire. With some of the overlap, we may have the opportunity to pick up customers without any additional hires. I think we find ourselves in a very unique position, and we like where we sit with all the disruption. I don't necessarily think this is going to be the last disruption. That's what we've seen. There's going to be further disruption in the Southeast. I think we sit in a very unique position to potentially benefit from that. It may come in the form of hiring. Just for example, in Q3, I think we hired 10 new either Market Presidents or prominent lenders throughout the footprint. We've also been actively hiring in Q4.

Speaker #6: We may have the opportunity to pick up customers without any additional hires. So, I think we find ourselves in a very unique position, and we like where we are with the disruption. And, again, I don't.

Speaker #6: sit with all And I think I think we sit in a very unique position to to potentially benefit from that . And again , it may come in the form of hiring .

Speaker #6: Don't necessarily think this is going to be the last disruption that's what we've seen . There's going to be further disruption in the southeast .

Speaker #6: And Q just just for example , in Q3 , I think we we hired ten new either market presidents or prominent lenders throughout the throughout the footprint .

Speaker #6: We've also been actively hiring in Q4 . But again , in some cases , we have the opportunity to to pick up potential business , and we won't have to hire .

Kevin Chapman: In some cases, we have the opportunity to pick up potential business, and we won't have to hire. We don't feel like we'll have to hire to do that. It's going to be, again, we're excited that we're not in the middle of a conversion. We're not in the middle of approvals. We're not in the middle of anything, that we're on the other side of our conversion, the other side of our integration, and really focused to what we want to do, which is get business and gain market share. We're excited about where we stand right now as it relates to that.

Speaker #6: We don't feel like we'll have to hire to do that . So so it's going to be again , we're excited that we're not in the middle of a conversion .

Speaker #6: We're not in the of approvals . We're not in the middle of anything that we're on the other side of our conversion , other side of our integration .

Speaker #6: And really focus to , to , to , to what we want to do , which is get business and gain market share .

Speaker #6: And so we're excited about where we stand right now as it relates to that.

Speaker #13: Got it . Yeah . You guys are definitely in a in a good position . Thanks for the color .

[Analyst]: Got it. Yeah, you guys are definitely in a good position. Thanks for the color.

Speaker #6: Thank you David .

Kevin Chapman: Thank you, David.

Speaker #4: Thank you . And the next question comes from Katherine Miller with KBW .

Operator: Thank you. The next question comes from Catherine Mueller with KBW.

Speaker #14: Hi . Thanks . Good morning .

[Analyst]: Thanks. Good morning.

Speaker #7: Good morning Katherine .

[Analyst]: Good morning, Catherine.

Speaker #14: I wanted to circle back on expenses . Just to kind of zone in on maybe looking at the expense trajectory into 26 . So if I lower expenses per what you're talking about , Jim kind of somewhere around 2 to 3 million each of the next two quarters , I'm kind of starting next year to 161 base .

[Analyst]: I want just to circle back on expenses, just to kind of zone in on maybe looking at the expense trajectory into 2026. If I lower expenses per what you're talking about, Jim, kind of somewhere around $2 million to $3 million each of the next two quarters, I'm kind of starting next year at a $161 million base. If I just annualize that number, I'm basically where consensus is for 2026 in expenses, which is $645 million. As I'm thinking about that, I mean, do you feel like we're in a position where you're lowering expenses the next two quarters and then we're flat, or should we actually grow a little bit off of that base in the first quarter of 2026, just, you know, kind of given better revenue growth and opportunities in your markets?

Speaker #14: And if I just annualize that number , I'm basically where consensus is for 26 and expenses , which is 645 . And so as I'm as I'm thinking about that , I mean , do you feel like we're in a position where you're where you're lowering expenses the next two quarters and then we're flat , or should we actually grow a little bit off of that base in the first quarter of 26 ?

Speaker #14: Just kind of given better , better revenue growth and opportunities in your markets ?

Speaker #7: Katherine , I would say I would guide you towards that consensus number or touch better for 26 . I think that's a reasonable outlook for us .

James Mabry: Catherine, I would say I would guide you towards that consensus number or a touch better for 2026. I think that's a reasonable outlook for us. We sort of got the crosswinds of the efficiencies from the deal, and then the things that Kevin mentioned. You know, we sit in a really good spot right now, geographically, and just as a company, having gotten the conversion behind us, the integration. Still, there's work to do, but it's gone really well. I think what you laid out, I mean, we'll end up with a Q1 run rate, and I think it'll be a pretty clean quarter overall in terms of expenses. There may be a little noise in there, but I think it'll be pretty clean.

Speaker #7: And we've sort of got the crosswinds of the efficiencies from the deal . And then the things that Kevin mentioned , you know , we sit in a really good spot right now geographically and and just as a company , having gotten the conversion behind us , the integration still there's work to do .

Speaker #7: But it's gone really well . And so but I think what you laid out I mean , we'll end up with a , you know , Q1 run rate .

Speaker #7: And I think it'll be a pretty clean quarter overall in terms of expenses . There may be some a little noise in there , but I think it'll be pretty clean .

Speaker #7: And then we'll have , you know , we'll have merit that'll that'll impact our numbers a little bit towards the middle of the year .

James Mabry: We'll have merit that'll impact our numbers a little bit towards the middle of the year, but I think that consensus number is probably a pretty good number, maybe a touch better.

Speaker #7: But I think that consensus number is probably a pretty good number. Maybe, maybe a touch better.

Speaker #14: Okay . That's awesome . Very helpful . And then on the deposit side , it was interesting to see deposits up a little bit this quarter .

[Analyst]: Okay. That's awesome. Very helpful. On the deposit side, it was interesting to see deposits up a little bit this quarter. I know that's some mixed change, but now we'll have the benefit of two cuts. We're hearing from a lot of other banks this quarter that deposit costs are getting more and more competitive. I'm just curious on how you're kind of thinking about deposit costs and betas over the next few cuts relative to what we've seen over the past 100 basis points of cuts.

Speaker #14: And I know that's the mixed change, but now we'll have the benefit of two cuts. However, we're hearing from a lot of other banks this quarter that deposit costs are becoming more and more competitive.

Speaker #14: And so just curious on how you're kind of thinking about deposit costs and betas over the next few cuts relative to what we've seen over the past 100 basis points of cuts ?

Speaker #7: Well , certainly on the deposit pricing side , where we've seen the most pressures . I mean , we you know , the loan side is always competitive , but I feel like it's the any , any sort of improvement deposit side has been grudgingly .

James Mabry: On the deposit pricing side is where we've seen the most pressures. The loan side is always competitive, but I feel like any sort of improvement on the deposit side has been grudgingly so. It just feels really tough there. I think our betas on interest-bearing deposits and loans are probably roughly the same in the mid-30% for 2026 between now and year-end 2026. The key variable there is what we see in the deposit side and people's thirst for that funding. As you said, we had a little bit of increase in the cost in Q4. I don't think our CD special, our five-month special, I don't think that's changed in pricing in, I don't know, four or five quarters. We hope to see that change. Right now, I wouldn't say there's the prospect of that near-term. We'll just see what the market and the competition gives us.

Speaker #7: So I mean , it just it feels really tough there . So I think our betas on interest bearing deposits and loans are probably roughly the same in the mid 30s for for 26 between between now and year end , 26 .

Speaker #7: And the key variable there is just is what we see in the deposit side and people's thirst for that funding. So, as you said, we had a little bit of an increase in the cost in Q4.

Speaker #7: I don't , I don't think our I don't think our CD special , our five month special , I don't think that's changed in pricing .

Speaker #7: And I don't know, 4 or 5 quarters. And then there's, and we hope to see that change. But right now, I wouldn't say there's the prospect of that in the near term.

Speaker #7: So we'll just see what the we'll see what the market and the competition gives us . But it's been it's been tough to eke out gains on the on the funding cost side .

James Mabry: It's been tough to eke out gains on the funding cost side.

Speaker #14: Makes sense . Great . Thank you .

[Analyst]: Makes sense. Great. Thank you.

Speaker #6: Thank you Catherine .

Kevin Chapman: Thank you, Catherine.

Speaker #4: Thank you . And once again please press star then one if you would like to ask a question and the next question comes from Janet Lee with TD Cowan .

Operator: Thank you. Once again, please press star then one if you would like to ask a question. The next question comes from Janet Lee with TD Cowen.

Speaker #15: Good morning .

[Analyst]: Good morning.

Speaker #6: Hey good morning Janet .

Kevin Chapman: Hey, good morning, Jen.

Speaker #15: Clearly driving improved returns and increasing profitability . Is it looks like that is one of the key goals for you . Kevin , in terms of like expectations being raised further on your internally , I guess for for Renaissance and leading with that increased profitability .

[Analyst]: Clearly, driving improved returns and increasing profitability, it looks like that is one of the key goals for you, Kevin. In terms of expectations being raised further on your internally, I guess, for Renasant and leading with that increased profitability, aside from the expense side, on the revenue side, can you just give us what you mean by that? As in, what kind of examples are there? Is it employees, like the bankers bringing in more low-cost deposits or bringing in more fee-income products? What does that mean?

Speaker #15: Aside from the expense side and on the revenue side, can you just give us an example of what you mean by that? As in, like, what kind of examples are there?

Speaker #15: You know , employees like the bankers bringing in more like low cost deposits or bringing in more like fee income products . What does that mean ?

Speaker #6: Yeah . So , so , so thank you . So great . Great question . Let's break that down . So so one one thing that's weighed on our profitability maybe is really a little bit of a lack of scale .

Kevin Chapman: Thank you. Great question. Let's break that down. One thing that's weighed on our profitability maybe is really a little bit of a lack of scale. We made investments, but we didn't quite get the scale that we needed, whether it's our average loan to lender, loan to relationship manager, or our average deposit to branch. We've been focusing on looking at performance at the individual or the market level to improve that. When we see our growth happening all throughout our footprint, that's encouraging to us because we're actually doing it with less headcount right now. If we look at what the full-time employees were of Renasant and The First Bancshares before we announced the acquisition and where we are at 9:30, we're down over 300 employees. We're doing it with less. We're having above-average growth, and we're doing it with less employees.

Speaker #6: So we made investments but we didn't quite get the the scale that that we needed . Whether it's our average loan to lender loan to relationship manager , our average deposit to branch .

Speaker #6: And so we've been focusing on , you know , looking at performance at the individual or the market level to improve that . And so when we see our growth happening all throughout our footprint , that's encouraging to us because we're actually doing it with less headcount right now .

Speaker #6: But we if we look at if we look at what the full time and employees were of renaissance in the first before we announced the acquisition and where we are at 930 , we're down over 300 employees .

Speaker #6: So we're doing it with less . We're having we're having above average growth , and we're doing it with less employees . Now , some of that's part of cost savings , but some of it's not part of call saves .

Kevin Chapman: Some of that's part of call saves, but some of it's not part of call saves. It's been the ongoing accountability measures we've had. When we talk about the need for improvement and improved profitability, it's absolutely on the expense side, but it's also on the revenue side and getting more scale where we should have it. Whether that's at an individual market level, whether that's a Nashville or the coastal region, an Atlanta, where those are good markets where there's opportunity to grow, or whether it's at an individual lender level, we're holding everybody accountable for a higher level of expectations to support their cost. We really focus on the return of the individual, the return of the market to determine our success. We've increased our expectations, and our teams are responding to that.

Speaker #6: It's been the ongoing accountability measures we've had . So so when we talk about the need for improvement and the improved profitability , it's absolutely on the expense side .

Speaker #6: But it's also on the revenue side and getting more scale where where we should have it . And so whether that's at an individual market level , whether that's a national or a the coastal region , an Atlanta where those are good markets , where there's opportunity to grow or whether it's at a an individual lender level , we're holding everybody accountable for a higher level of of of expectations to support their cost .

Speaker #6: And we really focus on the return of the individual , the return of the market to determine our success . And we've we've increased our expectations and our teams are responding to that .

Speaker #6: So I don't know if that provides enough color , but that gives a little bit of a glimpse as to what we're talking about as it relates to improving the accountability and improving the revenue growth .

Kevin Chapman: I don't know if that provides enough color, but that gives a little bit of a glimpse as to what we're talking about as it relates to improving the accountability and improving the revenue growth, the performance that comes along with the efforts to reduce expenses.

Speaker #6: The performance that comes along with the with the efforts to reduce expenses .

Speaker #15: Got it . Thanks for the color . And in terms of your on the loan and deposit growth , do you so you mentioned mid-single digits sort of growth for you guys on a normalized basis .

[Analyst]: Got it. Thanks for the color. In terms of your loan and deposit growth, you mentioned mid-single digit sort of growth for you guys on a normalized basis. I get that the payoffs were a little elevated, I mean, not elevated, the other way around. Were smaller than expected. Do you still think that mid-single digits is sort of a good run rate for you, or could we expect a little bit higher in terms of both deposit and loan growth?

Speaker #15: I get that the payoffs are a little elevated . And I mean not elevated the other way around . We're smaller than expected .

Speaker #15: So, do you still think that mid-single digits is sort of a good run rate for you, or could we expect a little bit higher in terms of both deposit and loan growth?

Speaker #6: Yeah. So I think right now, just giving, I'd like to get through Q4 before we set any new expectations, just given where the ten-year is and where we think that some payoff elevation could happen in Q4.

Kevin Chapman: I think right now, just given I'd like to get through Q4 before we set any new expectations, just given where the 10-year is and where we think that some payoff elevation could happen in Q4. Before we change that, we're still looking at the mid-single digit, which bakes in an uptick of payoffs, prepayments happening in Q4 just due to a lower rate environment, particularly on the 5 and the 10-year spot on the curve. We're still targeting mid-single digit, but I can tell you our focus is to continue to find every good opportunity we can and find a banking relationship with that opportunity, whether it's on the loan or deposit side.

Speaker #6: But before we change that . So we're still looking at the mid-single digit , which bakes in , which bakes in an uptick of of payoffs .

Speaker #6: Prepayments happening in Q4 are due to a lower rate environment, particularly on the five- and ten-year spot on the curve.

Speaker #6: So so we're still targeting mid-single digit , but I can tell you our focus is continued to find every good opportunity we can and find a banking relationship with that opportunity , whether it's on a loan or deposit side .

Speaker #6: But but I think Q4 is going to be interesting , at least for us , to see how prepayment speeds react to where we find ourselves in the current , the current curvature of the the interest rate curve , current slope of the interest rate curve .

Kevin Chapman: I think Q4 is going to be interesting, at least for us, to see how prepayment speeds react to where we find ourselves in the current curvature of the interest rate curve, current slope of the interest rate curve.

Speaker #15: Thank you .

[Analyst]: Thank you.

Speaker #6: Thank you Janet .

Kevin Chapman: Thanks, Janet.

Speaker #4: Thank you . And this does conclude the question and answer session . I would like to turn the floor to Kevin Chapman for any closing comments .

Operator: Thank you. This does conclude the question and answer session. I would like to turn the floor to Kevin Chapman for any closing comments.

Speaker #6: Thank you . We appreciate your interest in Renasant this morning and we look forward to continuing our conversations with you throughout the quarter .

Kevin Chapman: Thank you. We appreciate your interest in Renasant this morning, and we look forward to continuing our conversations with you throughout the quarter. Thank you.

Speaker #6: Thank you .

Operator: Thank you. The conference is now concluded. Thank you for attending today's presentation. We now disconnect your lines.