Good morning and welcome to the Renasant Corporation 2025 Second 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 a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Kelly Hutcheson, Chief Accounting Officer for Renasant Corp. Please go ahead. 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 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. 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. Thank you, Kelly, and good morning. We appreciate you joining the call and look forward to sharing results that reflect our merger with The First Bancshares and the successes we've enjoyed since the two companies came together. We closed the transaction on April 1 and our second quarter numbers reflect a full quarter of operations from both companies. I am proud of the results and believe they are a great reflection on the hard work of our employees in bringing the companies together. While we still have systems conversion in early August, the cultural integration of our employees and customers has gone well. The teamwork and collaboration from employees in all areas of both companies has put us right where we need to be from an overall perspective of the merger. We are very encouraged by these early results and we will continue to remain focused on the work of meeting the needs of our customers by successfully integrating teams from both the companies. I will now highlight a few of our second quarter financial results. Our reported earnings were $1 million or $0.01 per diluted share. Adjusted earnings were approximately $66 million or $0.69 per diluted share. Importantly, both sides of the balance sheet demonstrated positive growth for the company and revealed the work done to solidify employee and customer relationships. Loans were up $312 million or 7% from what the combined companies reported on March 31st. Likewise, deposits were up $361 million or 7%. We also saw meaningful expansion in the core net interest margin from 3.42% - 3.58%. Reported margin, which reflects purchase accounting adjustments, rose from 3.45% - 3.85% for the quarter. Our adjusted total cost of deposits decreased 18 basis points to 2.04% while our adjusted loan yields decreased only 1 basis point to 6.18%. As you can see, our earnings trajectory and balance sheet strength are evident in the second quarter results. We are well positioned for the second half of the year and are on track to realize the benefits of the combination. I will now turn the call over to Jim. Thank you, Kevin. The merger creates an exciting but noisy quarter. I'll begin with highlights from the merger. The fair value of assets acquired totaled $7.9 billion and included total loans of $5.2 billion. The fair value of liabilities assumed totaled $6.9 billion and included total deposits of $6.4 billion. Core deposit intangibles totaled $159.6 million and preliminary goodwill arising from the transaction totaled $428.7 million. From a capital standpoint, all regulatory capital ratios remain in excess of required minimums to be considered well capitalized. Turning to asset quality, we experienced improvement in our past due loan percentage and nonperforming loans were flat. There was an uptick in classified loans that was largely driven by layering in the portfolio from The First and not due to deterioration. Excluding day one provisions, we recorded a credit loss provision on loans of $14.7 million comprised of $13.2 million for funded loans and $1.5 million for unfunded commitments. Net charge-offs were $12.1 million largely comprised of two credits and the ACL as a percentage of total loans increased 1 basis point quarter over quarter to 1.57%. Turning to the income statement, our adjusted pre-provision net revenue was $103 million. Net interest income growth was driven by improvement in the net interest margin and balance sheet growth. Noninterest income was $48.3 million in the second quarter, a linked quarter increase of $11.9 million. $9.7 million. Of this increase was attributable to The First while our mortgage division drove much of the remaining increase. Mortgage experienced a solid quarter in terms of volume, resulting in an increase in income of $1.6 million from the first quarter after excluding a gain on sale of MSR assets. Noninterest expense was $183.2 million for the second quarter. Excluding merger and conversion expenses of $20.5 million, noninterest expense was $162.7 million for the quarter. With systems conversion a couple of weeks away, we expect to see additional conversion-related expenses in the third quarter. We remain on track to achieve model synergies by year end. The improvement in net revenue, coupled with cost containment from the combined companies, resulted in an improvement in our adjusted efficiency ratio of about 7%. We are encouraged by the results of the second quarter and the momentum for the remainder of 2025. I will now turn the call back over to Kevin. Thank you, Jim. We began the process of this merger over a year ago. There has been a tremendous effort by employees from both companies to create the new higher performing Renasant. We are excited about capitalizing on the opportunities ahead of us and delivering strong financial performance to our shareholders. I'll now turn the call back over to the operator for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press Star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press Star then two. Our first question will come from Michael Rose with Raymond James. Please go ahead. Hey, good morning everyone. Thanks for taking my question. I just have a couple for you. Jim, maybe if we can just kind of walk through the margin. I think that the total amount of accretion is higher. The core margin was obviously up. Can you just give us some color on expectation? I know there's a lot of moving parts, including a full another quarter of the combination. What are the puts and takes for the core margin as we think about the combination as we move forward, and then what should we think about in terms of scheduled accretion for the next couple quarters? Thanks. Good morning, Michael. Thanks for the question. A couple things we focus on core and I'll certainly touch on the purchase accounting influence on overall margin. I would say in core our outlook includes two rate cuts later this year, I think September and December. We've got that in there. I would say they have a de minimis impact on our guidance or expectations for margin. A core margin, I would say in terms of the core looking forward and certainly in Q3 and maybe to a lesser extent in Q4, we do see room for some modest expansion in that core margin. We were at 3.58% as you know, for Q2. I'm cautious to use a spot margin number, but I would offer this. Our spot margin in June was 3.60%, so that'll give you a sense of some upside there. Although, again, cautionary note there, monthly margins can be a little misleading. I'd say that in the core, some modest expansion expected here in the near term. In terms of the accretion, think about in two buckets, interest and credit. Of course, interest, we view that over time as that accretion coming into core. That'll transition from purchase accounting into core NIM over time. I think that for the quarter, the credit, excuse me, the interest accretion was about just a little shy of $10 million. I would say for both interest and credit, in terms of trying to predict how that will come in an income statement in future quarters and the normal part of that, I would say you can use Q2 as a pretty good proxy for what Q3 and Q4 will look like as it relates to the accelerated pieces of that accretion. That's just a really tough thing to project. Stop there and happy to elaborate if it's helpful. Yeah. Obviously you had some purchase accounting adjustments, deposit amortization, and long-term borrowing amortization this quarter. If I just take the $17.8 million, is that what you're talking about? Should be, you know, kind of in the ballpark for the next couple quarters. Yeah, I would say so. We had roughly $16 million of purchase accounting accretion in the quarter, roughly, and maybe it's $17 million if you include some other things. The normal part of that was about $13 million, plus or minus. I would think that's a pretty good indicator of what you're likely to see in the next quarter or two. The accelerated piece, which is again a little less than maybe $5 million, is just a tougher thing to project. Michael, you know, trying to predict that is a tough thing to do. Totally got it. Just wanted to understand some of the pieces. Okay, perfect. Maybe just as a follow up, just as we think. About the loan growth of the combined. Company, obviously, pretty solid again this quarter. Can you just touch on pipelines, hiring efforts, and some of the benefits as we think about the combined company, larger balance sheet, et cetera, from a growth perspective as we move forward. Thanks. Yeah. Hey Michael, it's Kevin. If you look at what both companies did in Q4, you saw balance sheet growth, both loans and deposits in that 6%- 7% range. I know we all know this, but it was on the backdrop of probably one of the most disruptive times in the company. I commend the efforts of everybody throughout the company to integrate, plan for a conversion, and also continue to grow in our markets. We're extremely excited for, extremely excited of the work that was done to just grow the balance sheet in a very disruptive time. As we look at the pipeline, the pipeline's holding flat. If we look at our historical pipeline, if we look at our pipeline in Q2 compared to where it would have been in Q1, the Renasant legacy pipeline's flat as well as The First. When you put both of them together, we still have a very strong pipeline and would caveat that with that. The past two quarters, both companies' pipeline was up compared to prior quarters. As far as opportunities, we still see it, we still see, we firmly believe we're in some of the best markets in the country, some of the best markets in the Southeast. I think that's reflected in the pipeline. As we look out for the rest of the year, we're still guiding towards mid single digit loan and deposit growth. A couple of things could weigh on that or could factor into that, the payoffs. I think we've communicated in the past that we anticipate, we've anticipated payoffs to pick up throughout the course of the year. That hasn't really materialized yet. At any point in time, depending on the shape of the yield curve or volatility in the yield curve, that could accelerate. We're still guiding in that mid single digit and we've intentionally tried to get ahead of that at the beginning of this year towards the end of last year having production that would keep us in that mid single digit, but would just say pipelines are good and our team is focused on capturing market share opportunities throughout all of our markets. I think it's reflective in Q2. Okay, great. Thanks for taking my questions. I'll step back. Thanks, Michael. The second question comes from Matt Olney with Stephens. Please go ahead. Hey, good morning. Thanks for taking the question. Want to ask more about expense levels, and I think the core expenses that you mentioned look really good in the second quarter. It sounds like we should anticipate more non-core expenses the next few quarters as you integrate. As far as the core levels and as you layer in the cost savings, I'm curious about the expectations for the core expense levels in the next few quarters. I think before we said that the first full quarter of fully loaded cost savings wouldn't be until the first quarter of next year. Just looking for additional color if that's still the case. Thanks. Yes, as it relates to the expense outlook for the next couple of quarters, I'd say this: there's really no, as you would expect, there's virtually no efficiencies really reflected in Q2 from the merger. That'll start to show up in Q3. As you know, we've got our systems conversion slated for early August, and sometime after that we'll start to see those efficiencies show up. The way I would think about it is Q3, you'll see some efficiencies show up in the expense line, and then you'll see a little bit more show up in Q4. We still believe that when we get to Q1, our goal is to have a clean income statement that reflects all the efficiencies that we sought in the deal. The other thing I would add is, you know, you saw we had, I think it's roughly $20 million in merger expenses in Q2. Pardon me, I think you'll see about $25 million in the second half of the year in terms of merger expenses, and most of that will come in Q3. Okay, that's helpful, Jim. Appreciate that. Just as a follow up, maybe a bigger picture question, I think a year ago we talked about getting the efficiencies from the transaction and strategic goals, you know, ROA of 1.25, 1.30 and efficiency ratio down to 56%. As you just look at the overall landscape now and kind of the first full quarter with the transaction, any updates as far as your longer term strategic goals with respect to profitability, ROA and efficiency? Hey Matt, it's Kevin. No real update other than to say we're tracking right in line with what we laid out a year ago. If you look at the efficiency ratio for Q2, we are right on track. We've busted through the 60% hurdle that we've talked about a long time. We're comfortably below that. That doesn't include any of the cost saves yet to be realized in Q3 or Q4. The balance sheet growth that we expected that will drive revenue, that's occurring. What we laid out was, you know, the combination would unlock potential on both sides of the company and we think that's occurring. No real update other than we are right on target with where we plan to be. If you look at the balance sheet that we projected in July of last year, we came in really on both sides. Both Renasant and The First Bancshares came in right on top of where we expected to be. Everything is lining up the way that we want it to and it'll be our focus and our goal to continue to work and extract incremental improvements on the goals we laid out. Right now we feel very comfortable about the guidance that we laid out over a year ago about ROA, ROE and efficiency, those profitability metrics that we key in on. Okay, thanks for taking the questions. Thank you, Matt. The third question comes from Catherine Mealor with KBW. Please go ahead. Thanks. Good morning. Good morning, Catherine. Just one follow-up on the margin, Jim, can you tell us the duration of the amortization that we'll see on the time deposit secretion? I'm assuming that runs off pretty quickly. It's about five months, Catherine. Okay, perfect. This quarter we saw a little bit of elevated charge-offs of problem loans that was up to $2 million or so. Can you give us a little color on what that was and kind of what a fair run rate for that is moving forward? Hey, David. Morning. This is David. Good morning. On those two credits, those were both credits that we have had identified as problem loans. Carried them as rated assets for a period of time. Both of them were on the C&I side of the house. They were not necessarily systemic. There were individual scenarios that drove each one of those, and happy to provide color if needed on the individual situations, but they were one-off credit opportunities or credits that we needed to go ahead and remove from the balance sheet. One of them, the charge-off was almost fully impaired. The other one was a little bit more of a change from the company standpoint, and we went ahead and charged that one off again. Those weren't deemed to be systemic of our C&I portfolio, of our loan book. If you look historically, we've had a couple of bumpy quarters here and there as we've removed problem assets from our balance sheet. Normally, those numbers kind of revert back to, if you look at the last 12 months, I think we were 8- 10 basis points on average the last 12 months. That number, somewhere around 10 basis points, is plus or minus a couple percentage, kind of where we've been for the past few years. I would expect on a go-forward basis that number would probably be somewhere in that ballpark, maybe just a tad higher just based on the economic environment we're in, but somewhere plus or minus 10 basis points, maybe no higher than 15 basis points. Okay, great. Maybe one more if I could on just the buyback activity. Just kind of curious now that you've got the deal closed and you know marks are set and you've still got high levels of capital and certainly at your high levels, higher levels of ROTCE, you're accreting capital pretty quickly. Just curious how you kind of balance thoughts on potential buybacks. Catherine, this is Jim again. It's going to sound like a broken record, but first and foremost, that capital that we're accreting is there to support organic growth. As Kevin mentioned, we're really pleased with the growth that we've had, and we've had good growth for a number of quarters, so really pleased with that. That's first and foremost. I would say certainly any bolt-on, and we've talked about this from time to time, any bolt-on sort of small acquisitions that add to our expertise and knowledge in specialty finance areas, factoring, asset-based lending, whatever, that's something we continue to look at. I don't envision that being significant, but we remain very interested in adding to what we've got there, and I would say talent too. It's part of the organic growth picture, but always thinking about addition of talent to the team, and are hopeful that those opportunities will continue to be available to us. The other thing I will add is we continue to look at, we did, I think, two legacy Renasant restructures in the securities portfolio. We continue for that index, and certainly buybacks are there, but you can tell with the order I've sort of walked through those that buybacks aren't necessarily at the top of the list, but they certainly are on the list given the way Creek Capital. Lastly, in the back of our minds, although it's clearly not anything in the near term, we want to think about maintaining capital for future bank M&A down the road. That's, I think, the way we sort of think about the pecking order in terms of capital levers. Very helpful, thank you. The fourth question will come from Stephen Scouten with Piper Sandler. Please go ahead. Thanks. Maybe just to follow up on some of the things you just said, Jim, about capital allocation longer term, appreciating that you haven't even gotten to the quarter conversion on FBMS yet. When would you guys be open to thinking about whole bank M&A again if the opportunity arose? Would there be an area of focus or a size of focus at? Some point down the line? Is it again just too early to think about that? I'll take this. I think it's a little bit too early to really plan for anything definitive. We have conversations with a variety of different management teams. We have continued those conversations even as we've been focused on The First. I'll just reemphasize, and I think you and I have had this conversation, the focus is The First. This has the most meaningful impact for both companies, both shareholders, and that's where our focus is. I know there's a lot of focus on the cost saves, there's a lot of focus on conversion. We as a management team are focused on the balance sheet and the revenue that it drives. That's where our attention is, and it's on track. We don't want anything in front of us that's going to derail us or get us off track from the benefits that are available to us with The First. That's where our focus is as we get past conversion, as we continue to fully and successfully integrate both companies. Then maybe we'll be a little bit more, maybe we'll change our position on what our focus will be, M&A. Right now I would just say we are squarely focused on the largest acquisition we've done with the most customers, the most branches, most employees. Our focus has the most impact to both shareholders, and honestly, anything that would be on our radar screen wouldn't be as positively impactful as what the opportunity is. That's why our focus is there. Right now we're so close to the finish line. We don't want to do anything that would self-inflict, you know, an error or anything that would cause us to stray from this opportunity. That's where we're focused right now. That'll change over time. Right now we're focused on wrapping up the successful conversion and successful integration of The First. Yeah, that makes a lot of sense. Appreciate that color. On the remaining securities from The First, I think you guys sold about a little less than half of their book. Was that kind of always the plan for that securities book, or did you end up changing the path to any degree in terms of what you sold and what you kept? Could that still be in the cards potentially to evaluate moving forward? I would say we sold roughly 50% of the securities at the firm and our team had, I think, pretty early on done a lot, did a lot of work early on. That number may have moved around a little bit over time, frankly not very much. What we ended up selling and executing on was sort of planned for a while. I don't see, you never, you know, never preclude anything. If there's additional work to do in the securities portfolio, of course, it's really all Renasant. That's the way I sort of think about it. Any addition, any future in terms of repositioning would likely be on the Renasant side. Got it. Perfect. Just last thing for me, you guys gave a lot of good credit color and it sounds like some of the maybe noise this quarter was just kind of deal related and nothing to be overly worried about moving forward. The provision was still obviously a bit higher than it has been, even the kind of one-time accounting noise. Is that more about just how the model worked with the combined balance sheet and keeping the loan losses or percentage relatively flat? Is that the way we should think about it? The reserve percentage kind of staying in this mid-150s range, or what were the other dynamics that kind of led to that? Was that $14.7 million and, I don't know if you want to call it like core provision, if you will. Hey Stephen, this is David. As you know, you pointed out there's a lot of noise in that CECL number this quarter. As we noted, the PCD marks as related to The First. If we remove those from the conversation, the other part, the increase in the provision in Q2 was largely related just to how our model works, as you pointed out, particularly with a couple of losses that we had for the quarter that was charged off. That just impacted our factors, and I'll say a couple of factors of our model. In particular, those two drove our historical loss within those respective books, particularly the C&I and unoccupied CRE, and that historical loss ratio was modified Q2 relative to those loans. That just caused a change in our model. There was a relook, as we do every quarter, in our Q factors and had a reflection on our reserves on our model that wasn't necessarily specific to those two credits. That's something we do consistently on a quarterly basis. The third attribute, I would just say, our loan growth, obviously the level of loan growth in the quarter, would have had a material impact on our model as well from a provisioning standpoint. All three of those, but it was a model-driven size that drove the increase in provision for the quarter. That's great. That's extremely helpful. Thank you guys for all the time this morning. Appreciate it. Thank you, Stephen. That's bizarre. What the. Do we still have anybody in the queue? Are we ready for the next question? We are ready for the next question. Yes. The next question comes from David Bishop at Hovde Group. Thank you. Hey, good morning, John. I'm not sure what happened there. Hey, a question for Jim. Just curious. The interest rate risk position, you know, post close of The First acquisition, maybe how the balance sheet sets up for a potential 25 bps Fed rate cut. Just curious what your sensitivity looks like post merger. Sure. Good morning, Dave. As you probably recall, The First really complemented our balance sheet in that it would starve our a little bit. If you look at the rate cuts, of course, they occur late in the, but they really have virtually no impact on the margin guidance that we would give now. Full year, probably a little deeper. I can say that without The First, it would have been a little bit different story. The First definitely benefits our sensitivity position in that we're a little less sensitive. That sort of came across as we, or happened as we thought, in terms of merging the balance sheet together. Got it. Kevin, Jim, just curious, you talked about the opportunities on the expense side of the equation. Are there any opportunities on the fee income side of the house that really haven't been tapped yet, that aren't in the numbers yet, that has you pretty. Excited as you look forward. Yeah Dave, I think there's a couple and I think you're seeing start to build in the numbers. One, I know we've had to apologize for being in the mortgage business for the last couple of years, but mortgage had a nice rebound in Q2 and I think actually we were contrary to maybe what was happening nationally, just some of the data coming in the mortgage bankers and you know the opportunity we have in the new footprint with The First, there's a lot of inbound migration, there's a lot of rooftops that will only help and assist mortgage. On the treasury management side, you know we talk about a conversion in 10 days of our system. We've been slowly converting our treasury management solutions into The First and so that's been ongoing and we think that has potential upside in the future related to income that can be off that and then also other things like capital markets and things that we've done management, the desk that we operate now. These numbers are in some cases, two of those numbers may be buried in other noninterest income, they're growing at a fairly appreciable rate and there's been really good adoption, really good interest from our team members at The First about those products, what they can offer, how it will differentiate them in the market. I think there's several opportunities in that noninterest income line item that are bright spots and should help drive additional incremental revenue as we continue to fully integrate. There are opportunities at the top line revenue net interest income with some of the core business lines or business lines that we provide, lending lines that we provide that maybe The First didn't have yet: ABL, factoring, equipment leasing, a larger loan limit, some of our expertise in specific real estate or middle market C&I. We've seen early wins, early successes in the first quarter in all those business lines of partnering up with bankers from The First as well as some of our teammates over on the Renasant side to capture market opportunity that otherwise either one of us wouldn't have had the opportunity to win. We're seeing early successes and early wins just in the first quarter and excited about what that indicates will happen in future quarters and future periods. Got it. Appreciate that color. Thank you, David. Again, sorry for the technical difficulties. If you have a question, please press star then one. We'll wait a moment temporarily in the case someone joins. With no further questions, this will conclude our question and answer session. I would like to turn the conference back over to Kevin Chapman, CEO, for any closing remarks. Wyatt and appreciate all that were able to join the call today. Look forward to having future conversations at conferences in Q3 and again, appreciate everybody that joined the call today. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.