Renasant Corporation today announced its financial results for the third quarter of 2015.  Net income for the third quarter of 2015 increased to $16.22 million, or basic and diluted earnings per share of $0.40, as compared to $15.54 million, or basic and diluted EPS of $0.49, for the third quarter of 2014.  

The Company's balance sheet and results of operations as of and for the three months ending September 30, 2015, include the impact of the Company's acquisition of Heritage Financial Group, Inc., a bank holding company headquartered in Albany, Georgia, and the parent of HeritageBank of the South, a Georgia savings bank, which was completed on July 1, 2015.  At the acquisition date, Heritage had $2.02 billion in total assets, $1.11 billion in loans, and $1.37 billion in deposits.  The assets acquired and liabilities assumed are recorded at estimated fair value and are subject to change pending finalization of all valuations.

During the third quarter of 2015, the Company incurred pre-tax merger expenses related to the Heritage merger of approximately $7.75 million, or $5.15 million on an after-tax basis, which equated to a reduction of $0.13 in basic and diluted EPS for the third quarter of 2015.

For the third quarter of 2015, the Company's return on average assets and return on average equity were 0.81% and 6.28%, respectively, as compared to 1.07% and 8.84%, respectively, for the third quarter of 2014. The Company's 2015 third quarter return on average tangible assets and return on average tangible equity were 0.93% and 12.20%, respectively, as compared to 1.20% and 16.50%, respectively, for the third quarter of 2014.  Excluding merger expenses on an after-tax basis, return on average assets and return on average equity were 1.07% and 8.28%, respectively, and return on average tangible assets and return on average tangible equity were 1.14% and 14.95%, respectively, for the third quarter of 2015.  The following table provides profitability metrics for the third quarter of 2015 including and excluding the impact of after-tax merger expenses from the Heritage acquisition:

"We are pleased with our third quarter financial results highlighted by the completion of the Heritage acquisition and 23.18% annualized linked quarter legacy loan growth," commented Renasant Chairman and Chief Executive Officer, E. Robinson McGraw. "Excluding merger expenses on an after-tax basis, our diluted EPS of $0.53 per share represents some of the highest reported quarterly earnings for the Company and was driven by the strong performance of our legacy company coupled with the successful conversion of Heritage's operations.  Furthermore, the continued sustainability of this profitability is reflected in our return on average assets, excluding merger expenses, of 1.07% for the quarter, marking the sixth consecutive quarter we've achieved greater than 1.00% return on average assets."

Total assets as of September 30, 2015, were approximately $7.92 billion, as compared to $5.81 billion from December 31, 2014, and $5.90 billion on a linked quarter basis.  

Total loans, including loans acquired in either the Heritage merger, First M&F Corporation ("First M&F") merger or in FDIC-assisted transactions (collectively referred to as "acquired loans"), were approximately $5.28 billion at September 30, 2015, as compared to $3.99 billion at December 31, 2014, and $4.04 billion on a linked quarter basis. Excluding acquired loans, loans grew $339.52 million, or 13.89% annualized, to $3.61 billion at September 30, 2015, as compared to $3.27 billion at December 31, 2014, and increased $199.08 million, or 23.18% annualized, from $3.41 billion on a linked quarter basis.

Total deposits were $6.23 billion at September 30, 2015, as compared to $4.84 billion at December 31, 2014, and $4.89 billion on a linked quarter basis.  The increase in deposits is primarily attributable to the acquisition of Heritage. Noninterest-bearing deposits averaged approximately $1.27 billion, which represents 20.38% of the Company's average deposits, for the third quarter of 2015, as compared to $896.86 million, or 18.74% of average deposits, for the third quarter of 2014.  The Company's cost of funds was 33 basis points for the third quarter of 2015, as compared to 47 basis points for the same quarter in 2014.

As of September 30, 2015, the Company's Tier 1 leverage capital ratio was 8.94%, its Common Equity Tier 1 risk-based capital ratio was 9.82%, its Tier 1 risk-based capital ratio was 11.32%, and its total risk-based capital ratio was 12.09%. The Company's regulatory capital ratios continue to be in excess of the regulatory minimums required to be classified as "well-capitalized."  At September 30, 2015 our tangible common equity ratio was 7.40%.

Net interest income was $68.68 million for the third quarter of 2015, as compared to $50.47 million for the third quarter of 2014, and $51.67 million on a linked quarter basis. Net interest margin was 4.09% for the third quarter of 2015, as compared to 4.12% for the third quarter of 2014, and 4.17% on a linked quarter basis.  Additional interest income recognized in connection with the acceleration of pay downs and payoffs from acquired loans increased net interest margin 4 basis points in the third quarter of 2015, as compared to 28 basis points on a linked quarter basis and 11 basis points in the third quarter of 2014.

Noninterest income was $32.12 million for the third quarter of 2015, as compared to $22.56 million for the third quarter of 2014, and $22.92 million on a linked quarter basis. The increase in noninterest income is primarily attributable to the Heritage acquisition and its mortgage operations. 

Noninterest expense was $76.09 million for the third quarter of 2015, as compared to $48.18 million for the third quarter of 2014 and $51.18 million on a linked quarter basis.  The increase in noninterest expense, when compared to the same period in 2014 as well as on a linked quarter basis, was primarily due to the expenses of the acquired Heritage operations as well as merger expenses incurred during the quarter in connection with the Heritage acquisition of $7.75 million.

At September 30, 2015, total nonperforming loans (loans 90 days or more past due and nonaccrual loans) were $47.20 million and total OREO was $36.33 million. The Company's nonperforming loans and OREO that were acquired either through the Heritage merger, First M&F merger or in connection with FDIC-assisted transactions (collectively referred to as "acquired nonperforming assets") were $32.03 million and $22.40 million, respectively, at September 30, 2015.

Since the acquired nonperforming assets were recorded at fair value at the time of acquisition or 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 $15.17 million as of September 30, 2015, as compared to $20.19 million as of December 31, 2014. Nonperforming loans as a percentage of total loans were 0.42% as of September 30, 2015, as compared to 0.62% as of December 31, 2014.

Annualized net charge-offs as a percentage of average loans were 0.04% for the third quarter of 2015, as compared to 0.50% for the third quarter of 2014. The Company recorded a provision for loan losses of $750 thousand for the third quarter of 2015, as compared to $2.22 million for the third quarter of 2014.

The allowance for loan losses totaled $42.05 million at September 30, 2015, as compared to $42.29 million as of December 31, 2014. The allowance for loan losses as a percentage of loans was 1.17% as of September 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 277.22% as of September 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 declined to 0.23% at September 30, 2015, as compared to 0.32% at December 31, 2014.  OREO was $13.94 million as of September 30, 2015, as compared to $17.09 million as of December 31, 2014.