Renasant Corporation (RNST) — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; this is an annual filing, not a stand-alone fourth-quarter report. Renasant is a Southeastern U.S. banking and financial-services company, with nationwide factoring and asset-based lending operations. Amounts below are in U.S. dollars; financial figures are generally shown in millions.
Business context and results
The company reported three segments: Community Banks, Insurance, and Wealth Management. It acquired Southeastern Commercial Finance and Republic Business Credit during 2022. Total assets rose 1.1% to $16.99 billion, while loans, net of unearned income, grew 15.5% to $11.58 billion.
| Metric | 2022 | 2021 |
|---|---|---|
| Net interest income | $481.3 million | $424.0 million |
| Net interest margin | 3.30% | 3.07% |
| Noninterest income | $149.3 million | $227.0 million |
| Noninterest expense | $395.5 million | $429.8 million |
| Net income | $166.1 million | $175.9 million |
| Diluted EPS | $2.95 | $3.12 |
| GAAP efficiency ratio | 61.89% | 65.35% |
| Cash dividends per common share | $0.88 | $0.88 |
Cash flow, funding, debt and capital
- Operating cash flow was $574.0 million; investing activities used $2.04 billion and financing activities provided $167.6 million. Cash and cash equivalents ended the year at $576.0 million, down from $1.88 billion.
- Deposits declined 3.0% to $13.49 billion. Noninterest-bearing deposits were $4.56 billion; uninsured deposits were $4.11 billion. The company attributed deposit declines to competition, higher rates, and normalization after prior government stimulus.
- Short-term borrowings increased to $712.2 million, including $700.0 million of FHLB advances; long-term debt was $428.1 million. Total borrowings were approximately $1.14 billion. Unused FHLB credit availability was $3.65 billion.
- Company regulatory ratios remained above “well-capitalized” thresholds: CET1 was 10.21%, Tier 1 risk-based capital 11.01%, and total risk-based capital 14.63%. These were lower than 2021 ratios of 11.18%, 12.10%, and 16.14%, respectively.
- Shareholders’ equity decreased to $2.14 billion from $2.21 billion, primarily reflecting accumulated other comprehensive losses and dividends. Tangible equity to tangible assets, a non-GAAP measure, was 7.01% versus 7.86%.
Material changes and unusual items
- Net interest income increased 13.5%, mainly from higher loan yields and loan growth, partly offset by increased deposit and borrowing costs as interest rates rose.
- Noninterest income fell 34.3%, primarily because mortgage production and related gains declined. Mortgage originations for sale fell to $1.68 billion from $4.06 billion; mortgage banking income was $35.8 million versus $109.6 million.
- Noninterest expense declined 8.0%, reflecting lower mortgage commissions, renegotiated data-processing contracts, and the absence of the $6.1 million debt prepayment penalty recorded in 2021.
- The company recorded a $23.8 million provision for loan credit losses, versus a $1.7 million recovery in 2021. The allowance for loan losses was $192.1 million, or 1.66% of loans, at year-end.
- Available-for-sale securities had $201.3 million of gross unrealized losses at year-end, versus $31.0 million a year earlier. The company reported no credit impairment and stated it did not intend, and was not likely to be required, to sell the securities before recovery. It transferred $882.9 million of securities from available-for-sale to held-to-maturity during 2022; related after-tax unrealized losses remain in accumulated other comprehensive income for amortization.
- Reported net charge-off ratios are inconsistent within the filing: the performance highlights state 0.04% of average loans, while the detailed credit-loss table reports 0.07% (with net charge-offs of $7.3 million). Verify the appropriate figure.
Outlook, risks and contingencies
The filing provides no specific earnings, revenue, or margin guidance. Management described priorities including organic loan growth, greater noninterest income, improved efficiency, technology investment, and opportunistic growth. These are strategic priorities, not quantified forecasts.
- Key risks include rising funding costs and deposit competition, interest-rate and liquidity sensitivity, economic deterioration, and credit exposure concentrated in commercial real estate and other business lending. Commercial real estate loans, including construction, were reported at $6.45 billion; 83.47% of loans had real estate as a primary or secondary collateral component.
- At year-end, commercial real estate loans were 284% of bank-level capital and acquisition, development and construction loans were 91%, under the filing’s 100/300 concentration test criteria.
- The company disclosed a third-party service-provider data breach involving certain customer names, addresses, and loan numbers; it stated that bank account information and Social Security numbers were not involved and costs incurred were immaterial as of the filing date.
- Other risks include acquisition integration and retention, allowance-estimation uncertainty, cybersecurity and vendor dependence, inflation, and transition of legacy LIBOR instruments. The company said its LIBOR transition efforts were ongoing; affected tenors were expected to continue until June 30, 2023.
- The company authorized a $100 million share-repurchase program in October 2022; no shares were repurchased under it in the fourth quarter. It reported no material pending legal proceedings, and management said various claims and lawsuits were not expected to materially affect the financial statements.
- Independent auditors issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded controls were effective.
Important facts for investors to verify
- Reconcile the filing’s 0.04% versus 0.07% net charge-off ratios.
- Track deposit outflows, deposit pricing, uninsured deposits, and reliance on FHLB advances or other wholesale funding.
- Assess securities’ unrealized losses, the held-to-maturity transfer, and the potential effects on liquidity and reported equity.
- Monitor commercial real estate concentrations, delinquency trends, and allowance adequacy as economic and property-market conditions change.
- Evaluate whether acquired businesses are integrated successfully and whether mortgage-related revenue declines are offset by recurring sources of income.