Renasant Corporation today announced financial results for the second quarter of 2015. Net income for the second quarter of 2015 was $15,394,000, or basic and diluted earnings per share (“EPS”) of $0.49 and $0.48, respectively, as compared to $14,853,000, or basic and diluted EPS of $0.47, for the second quarter of 2014.

On July 1, 2015, the Company acquired by merger Heritage Financial Group, Inc. (“Heritage”), a bank holding company headquartered in Albany, Georgia, and the parent of HeritageBank of the South, a Georgia savings bank. The combined company has approximately $7.77 billion in total assets with 171 banking, mortgage, wealth management, investment and insurance offices throughout Mississippi, Tennessee, Alabama, Georgia and Florida.  During the second quarter of 2015, the Company incurred pre-tax merger expenses related to the Heritage merger of approximately $1,467,000, or $906,000 on an after-tax basis, which equated to a reduction of $0.03in diluted EPS for the second quarter of 2015.

For the second quarter of 2015, the Company’s return on average assets and return on average equity were 1.06% and 8.42%, respectively, as compared to 1.02% and 8.67%, respectively, for the second quarter of 2014.  The Company’s 2015 second quarter return on average tangible assets and return on average tangible shareholders’ equity were 1.17% and 14.89%, respectively, as compared to 1.15% and 16.55%, respectively, for the second quarter of 2014.

“We are pleased with our second quarter financial results highlighted by 16.37% annualized linked quarter non-acquired loan growth and strong revenue growth driven from our mortgage operations.  Focusing on profitability for the quarter, our diluted earnings per share of $0.48 continues to represent some of the highest quarterly operating earnings in the 111-year history of our company excluding quarters which recognized one-time gains associated with acquisitions,” commented Renasant Chairman and Chief Executive Officer, E. Robinson McGraw.  “The sustainability of this profitability is reflected in our return on average assets of 1.06% for the quarter, marking the fifth consecutive quarter we’ve achieved greater than 1.00% return on average assets.”

Total assets as of June 30, 2015, were approximately $5.90 billion, as compared to $5.88 billion on a linked quarter basis and $5.81 billion as of December 31, 2014.

Total loans, including loans acquired in either the First M&F Corporation (“First M&F”) merger or in FDIC-assisted transactions (collectively referred to as “acquired loans”), were approximately $4.04 billion at June 30, 2015, as compared to $3.95 billion on a linked quarter basis and $3.99 billion as of December 31, 2014.

Excluding acquired loans, loans grew 4.30%, or 8.67% annualized, to $3.41 billion at June 30, 2015, as compared to $3.27 billion at December 31, 2014 and increased 4.08%, or 16.37% annualized, from $3.27 billion at March 31, 2015.

Total deposits were $4.89 billion at June 30, 2015, as compared to $4.84 billion at December 31, 2014, and $4.89 billion at June 30, 2014. The Company’s cost of funds was 40 basis points for the second quarter of 2015, as compared to 48 basis points for the same quarter in 2014.  The Company’s noninterest-bearing deposits averaged approximately $970 million, or 19.97% of average total deposits, for the second quarter of 2015, as compared to $937 million, or 19.58% for the fourth quarter of 2014, and $905 million, or 18.38% for the second quarter of 2014.

At June 30, 2015, the Company’s Tier 1 leverage capital ratio was 9.90%, its common equity Tier 1 capital ratio was 10.44%, its Tier 1 risk-based capital ratio was 12.52%, and its total risk-based capital ratio was 13.54%. The Company’s regulatory capital ratios continued to be in excess of the regulatory minimums required to be classified as “well-capitalized.”

“Looking at our capital levels, our tangible common equity ratio stands at 7.78% at June 30, 2015, which, coupled with our strong regulatory capital ratios, will continue to support future balance sheet growth whether organic or the result of additional external opportunity,” said McGraw.

Net interest income was $51.67 million for the second quarter of 2015, as compared to $52.17 million for the second quarter of 2014. Net interest margin was 4.17% for the second quarter of 2015, compared to 4.24% for the second quarter of 2014. Additional interest income recognized in connection with the acceleration of pay downs and payoffs from acquired loans was $3.60 million in the second quarter of 2015, which increased net interest margin 28 basis points, compared to $3.52 million, which is a 28 basis point increase in net interest margin for the same period in 2014.

Noninterest income increased 17.70% to $22.92 million for the second quarter of 2015, as compared to $19.47 million for the second quarter of 2014. The increase in noninterest income was primarily attributable to growth in the Company’s mortgage operations and resulting mortgage income.

Noninterest expense was $51.18 million for the second quarter of 2015, as compared to approximately $49.40 million for the second quarter of 2014.  The increase in the Company’s noninterest expense was primarily attributable to an increase in salary and employee benefits as well as merger related expenses.  The increase in salaries and employee benefits was due to higher levels of commissions paid in our mortgage banking division. 

At June 30, 2015, total nonperforming loans (loans 90 days or more past due and nonaccrual loans) were $44.26 million, and total other real estate owned (“OREO”) was $27.06 million. The Company’s nonperforming loans and OREO that were acquired either through the First M&F merger or in connection with FDIC-assisted transactions (collectively referred to as “acquired nonperforming assets”) were $23.10 million and $12.10 million, respectively at June 30, 2015.

Since the acquired nonperforming assets were recorded at fair value at the time of acquisition and/or are subject to loss-share agreements with the FDIC, which significantly mitigates our actual loss, the remaining information in this release on nonperforming loans, OREO and the related asset quality ratios excludes these acquired nonperforming assets. 

The Company’s nonperforming loans were $21.16 million as of June 30, 2015, as compared to $20.19 million at December 31, 2014. Nonperforming loans as a percentage of total loans were 0.62% as of June 30, 2015 and December 31, 2014.  The increase in nonperforming loans at June 30, 2015, was primarily due to a $2.8 million matured loan which was carried as 90 days past due at June 30, 2015 but has since been resolved through pay-off.

Annualized net charge-offs as a percentage of average loans were 0.16% for the second quarter of 2015, as compared to 0.23% for the same period in 2014. The Company recorded a provision for loan losses of $1.18 million for the second quarter of 2015, as compared to $1.45 million for the second quarter of 2014.

The allowance for loan losses totaled $41.89 million at June 30, 2015, as compared to $42.29 million as of December 31, 2014. The allowance for loan losses as a percentage of loans was 1.23% as of June 30, 2015, as compared to 1.29% as of December 31, 2014.

The Company’s coverage ratio, or its allowance for loan losses as a percentage of nonperforming loans, was 197.95% as of June 30, 2015, as compared to 209.49% as of December 31, 2014.   Loans 30 to 89 days past due as a percentage of total loans were 0.19% at June 30, 2015, as compared to 0.32% at December 31, 2014.

OREO was $14.97 million as of June 30, 2015, as compared to $17.09 million at December 31, 2014.

“We continue to see many opportunities on the horizon, specifically strong commercial loan pipelines which support our annual loan growth goals with a robust mortgage loan pipeline, both of which should drive continued revenue growth,” stated McGraw. “With the addition of the Heritage team, its customers and operations, we continue to be well positioned to accelerate profitability and earnings growth, which in turn, we believe will generate shareholder value.”