Renasant Corporation — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed February 25, 2022. This is an annual report, not a standalone fourth-quarter earnings report. Renasant is a regional bank holding company operating across seven southeastern states, with Community Banks, Insurance and Wealth Management segments.
Financial performance and condition
Unless otherwise noted, amounts are in millions of dollars. The filing presents financial results for the full year.
| Metric | FY2021 | FY2020 |
|---|---|---|
| Net income | $175.9 | $83.7 |
| Diluted EPS | $3.12 | $1.48 |
| Net interest income | $424.0 | $426.8 |
| Net interest margin | 3.07% | 3.44% |
| Noninterest income | $227.0 | $235.5 |
| Noninterest expense | $429.8 | $472.0 |
| Net charge-offs / average loans | 0.10% | 0.04% |
| Cash provided by operating activities | $142.7 | $82.2 |
- Pre-tax income was $222.8 million versus $103.5 million. The increase in earnings was driven largely by the swing from an $85.4 million loan-loss provision in 2020 to a $1.7 million recovery in 2021, alongside lower expenses. Net interest income declined slightly and mortgage banking income fell.
- GAAP efficiency ratio improved to 65.35% from 70.53%; the company’s adjusted, non-GAAP ratio was 65.32% versus 64.00%.
- Total assets rose 12.6% to $16.81 billion. Loans, net of unearned income, declined 8.4% to $10.02 billion, primarily as Paycheck Protection Program loans fell to $58.4 million from $1.13 billion. Loans excluding PPP grew 1.6%.
- Deposits increased to $13.91 billion from $12.06 billion; noninterest-bearing deposits were $4.72 billion, or 33.93% of deposits at year-end. Cash and cash equivalents rose to $1.88 billion from $633.2 million.
- Securities grew to $2.80 billion from $1.34 billion as management invested excess liquidity; purchases totaled $2.16 billion. Available-for-sale securities had $31.0 million in unrealized losses at year-end, which the company attributed to non-credit factors and did not recognize as impairment.
- Long-term debt was $471.2 million, including $359.4 million of subordinated notes and $111.4 million of junior subordinated debentures. The company issued $200 million of 3.00% fixed-to-floating subordinated notes and redeemed $45 million of other notes during 2021. It also reduced FHLB advances to $0.4 million from $152.2 million.
- Capital ratios remained above “well-capitalized” thresholds: company total risk-based capital was 16.14%, and the Bank’s was 14.44%. Shareholders’ equity was $2.21 billion; tangible common equity to tangible assets, a non-GAAP measure, was 7.86%.
- Mortgage banking income decreased to $109.6 million from $150.5 million. Mortgage originations for sale totaled $4.06 billion versus $4.48 billion. Wealth Management revenue was $20.5 million and Insurance commissions were $9.8 million.
Material changes and unusual items
- Net interest margin compressed as loan yields fell and a larger share of earning assets was held in lower-yielding cash and securities. Lower deposit costs partly offset the pressure.
- Mortgage servicing rights valuation contributed a $13.6 million positive adjustment in 2021, compared with a negative $11.7 million adjustment in 2020. The company also recognized a $4.7 million gain on terminated swaps and a $6.1 million debt prepayment penalty.
- Noninterest expense declined by $42.2 million, reflecting savings from a 2020 voluntary early retirement program and branch efficiency actions, as well as lower COVID-related expenses and provision for unfunded commitments.
- Other comprehensive loss was $35.5 million, principally reflecting unrealized losses on available-for-sale securities; accumulated other comprehensive income shifted from $25.1 million to a $10.4 million loss.
Outlook, commentary and risks
- The filing provides no specific earnings, revenue, margin or loan-growth guidance. Management described priorities including organic loan growth, more fee income, improved efficiency and technology investment, and stated it would continue to evaluate funding and balance-sheet actions to address margin pressure.
- Management’s year-end interest-rate simulations showed an asset-sensitive position: an immediate +100 basis-point rate shock was modeled to increase net interest income 9.35% in months 1–12 and 12.83% in months 13–24. These are scenario estimates based on assumptions, not forecasts or guarantees.
- Key risks include significant commercial real estate and real-estate collateral exposure, borrower and economic deterioration, interest-rate and liquidity changes, competition, acquisition integration, cybersecurity and third-party service-provider disruptions, regulation, and the transition from LIBOR to alternative rates. Commercial real estate loans were approximately 56.4% of loans; ADC loans equaled 82% of Bank-level capital.
- Uninsured deposits totaled $4.35 billion at year-end. The filing says the Bank’s liquidity sources include customer deposits, securities, $4.21 billion of unused FHLB capacity and $180 million of correspondent-bank lines; no correspondent-line balances were outstanding.
- The COVID-19 loan deferral program had ended; nine loans totaling approximately $0.5 million remained on deferral at year-end. Management reported no material pending legal proceedings. The independent auditor gave an unqualified opinion on the financial statements and internal controls; no material fourth-quarter changes in internal control were reported.
Important facts for investors to verify
- Whether the substantial earnings increase is sustainable after the exceptional 2020 credit-loss provision and 2021 recovery, and how future credit provisions evolve.
- How margin and earnings respond as interest rates change, including deposit repricing, securities yields and the assumptions underlying management’s rate-sensitivity simulations.
- Credit quality and concentration trends in commercial real estate and other real-estate-secured loans, including criticized loans, charge-offs and allowance adequacy.
- The composition, stability and cost of deposits, particularly uninsured and public-fund deposits, and the practical availability of stated contingent liquidity.
- The recurring earnings contribution from mortgage banking after lower production and the effects of MSR valuation changes and other unusual items.
- Progress and potential operational or financial impacts of the LIBOR transition, and the terms and future cost of subordinated debt.