Renasant Corporation (RNST) Q3 2026 earnings review
Renasant loan growth accelerates, but deposit outflows raise borrowing costs
Renasant, a southeastern US regional bank, accelerated its lending while public deposit withdrawals forced it into expensive wholesale borrowing. Total loans grew at an 11.5% annualised pace from last quarter, above what the company's own plan pointed to for the second half. However, profit per share excluding one-offs fell 9% from last quarter to $0.86 because the fast loan growth required a $13 million credit reserve addition.
| Loans from businesses owned a year ago | +3.5% from a year ago (total loans +11.5% annualized from last quarter) |
|---|---|
| Profit per share, excluding one-offs | $0.86 +12% from a year ago, -9% from last quarter |
| Net interest margin, excluding one-offs | 3.58% -0.03 percentage points from last quarter |
| Stock buyback plan | $175M new 1-year plan replacing $250M authorization |
⚖️ Verdict: 🟢 Bullish
The story got better because record loan originations and lower customer payoffs removed the main bottleneck on the bank's full-year lending plan, while overdue loans fell for a second quarter. One caution: losing $215 million in public deposits forced Chief Executive Kevin Chapman's team to add $491 million in short-term borrowings, which squeezed the lending margin.
The question now is whether Renasant can fund its loan pipeline with customer deposits rather than high-cost borrowings. Either seasonal government inflows return in the fourth quarter to pay down debt, or funding costs stay high and compress the lending spread. Fourth-quarter deposit balances and the conference call outlook will settle it.
🐂 Bull Case
Record Originations and Lower Payoffs Accelerated Loan Growth
Renasant is a southeastern US regional bank that needed a second-half lending surge to meet its full-year target after a slow first half. Chief executive Kevin Chapman said the quarter showed "strong loan growth with a record level of loan production". Total loans rose by $555.9 million, or 11.5% on an annualised basis,
- New loan production: $1.21 billion, up from $957 million last quarter
- Loan payoffs: $790 million, down from $895 million last quarter
- Loans from businesses owned a year ago: up 3.5% from a year ago by our math, stripping out the $58.3 million factoring portfolio bought in April
This surge matters because early loan payoffs had choked net growth for three quarters. The third-quarter addition covered more than two-thirds of the $613 million to $994 million second-half growth implied by the full-year outlook. By our math, the bank now needs only $247 million of net new loans in the fourth quarter to reach the middle of its full-year target.
What to watch: fourth-quarter loan payoffs in the earnings deck. Another quarter below $800 million would confirm that customer refinancing pressure has eased for good.
Problem Loans Fell and Coverage Rebounded
Credit quality had been a standing concern as overdue loans crept up following last year's acquisition of The First Bancshares. This quarter, the bank attributed its lower reserve ratio to "continued improvement in overall credit quality metrics and movements in the specific reserve". Nonperforming loans—loans that are in default or close to it—fell for a second straight quarter.
- Nonperforming loans: 0.89% of total loans, down from 0.97% last quarter and a peak of 1.06% in the first quarter
- Criticized loans (loans showing early signs of financial stress): 2.50% of total loans, down from 2.66% last quarter and 3.22% a year ago
- Loan loss reserves as a share of nonperforming loans: 168.75%, up from 158.73% last quarter
Net loan write-offs rose to $10.0 million, or 0.20% of average loans on an annualised basis, because a single borrower accounted for 0.16 percentage points of the loss. Even with that write-off, problem loans shrank across commercial and industrial lending as well as residential mortgages, easing fears of broad credit trouble.
What to watch: nonperforming loans in the non-owner-occupied commercial real estate book next quarter. A reading at or below the current 0.72% rate would show the largest loan book remains healthy.
Cost Discipline and Buybacks Support Earnings Power
Renasant has been hiring lenders from rival banks while trying to hold down overhead costs after last year's merger. Operating expenses fell $1.2 million from last quarter to $160.3 million, beating the $161.5 million ceiling management set three months ago. The bank cited a "decline in deferred compensation expense tied to market valuations and an increase in deferred loan costs driven by loan growth, partially offset by higher health insurance claims".
Salaries and employee benefits dropped to 34.5% of tax-equivalent revenue from 36.1% a year ago by our math. That pushed the efficiency ratio excluding one-offs—operating expenses as a share of revenue—down 2.8 percentage points from a year ago to 54.7%. Meanwhile, the lender bought back $42.6 million of its own stock, cutting average diluted shares by 3.9% from a year ago and replacing its expiring buyback plan with a new $175.0 million authorization.
What to watch: salaries and employee benefits expense in the fourth quarter. A figure below $96 million would prove the bank can add new bankers without driving up total payroll.
🐻 Bear Case
Deposit Outflows Forced a Jump in Expensive Borrowings
Chapman highlighted "continued momentum in core deposit growth and a stable core net interest margin". While consumer and commercial deposits grew by $141.5 million by our math, local governments and public agencies withdrew $214.7 million, pulling total deposits down by $73.2 million to $21.63 billion.
- Short-term borrowings: $806.5 million, up $491.3 million from last quarter at an average interest cost of 4.86%
- Total funding cost: 2.14%, up 0.06 percentage points from last quarter
- Net interest margin excluding one-offs (profit spread on lending): 3.58%, down 0.03 percentage points from last quarter
Because deposits shrank while lending surged, the bank had to fund its new loans with wholesale borrowings that cost more than twice as much as its 1.97% deposit base. That pushed the loan-to-deposit ratio to 91% from 88% last quarter and squeezed the lending spread. By our math, Renasant now needs $919 million of net new deposits in the fourth quarter to reach the middle of its full-year deposit plan.
What to watch: public fund deposit balances in the fourth quarter. If seasonal government inflows do not reverse the third-quarter drop, the bank will have to keep relying on high-cost borrowings.
Weak Mortgage Banking Dragged Fee Income Below Plan
Renasant relies on noninterest fee businesses—such as mortgage banking, wealth management and account service charges—to supplement its lending income. Management indicated last quarter that second-quarter fee income of $51.2 million was a good run rate for the second half. Instead, fee income fell $1.9 million to $49.3 million.
The company said the drop was "primarily due to rising mortgage interest rates that resulted in both decreased production of new loans and market value adjustments on pending loan sales". Mortgage rate lock volume—agreements with homebuyers to hold an interest rate—dropped $91.0 million from last quarter to $520.6 million, cutting net gains on loan sales in half to $2.4 million. Without a rebound in home lending, revenue growth rests entirely on expanding the loan book.
What to watch: mortgage banking income in the fourth quarter, which is typically a slow season for home buying. Another drop would leave full-year fee income below the second-quarter pace.
Risks this quarter didn't answer
Several standing governance and operational items were not updated in the earnings release or presentation deck and await the conference call or quarterly Form 10-Q filing.
- Internal control weakness: the material weakness in financial reporting controls from the 2025 annual report remains listed in the release's risk factors; the Form 10-Q will show if it is fixed.
- New deposit account openings: management did not print the number of new accounts opened this quarter; commentary on the call will show if the pace held near 10,000.
- Acquired factoring portfolio: standalone balances and revenue for the REV Capital buyout were not broken out; the Form 10-Q footnote will provide the update.
👓 Other Themes
Higher Interest Rates Cut Mortgage Production and Bond Values
A rise in market interest rates during the third quarter created two headwinds for the bank. Higher mortgage rates reduced homebuyer demand, cutting mortgage rate lock volume by 14.9% from last quarter. At the same time, higher bond yields caused an $86.0 million downward market value adjustment in the available-for-sale securities portfolio, which increased accumulated unrealized losses in shareholders' equity to $160.7 million.
💲 Other KPIs
Profit per share excluding one-offs rose 11.7% from $0.77 a year ago, when the bank was still absorbing The First Bancshares merger, but fell 8.5% from $0.94 last quarter. The quarterly drop happened because Renasant set aside $13.3 million for potential credit losses to cover its surging loan growth, up from $3.8 million in the second quarter.
Tangible book value per share—the bank's net asset value per share excluding goodwill and other intangible assets—grew 6.4% from $23.77 a year ago. It slipped 0.2% from $25.34 last quarter because $42.6 million of share buybacks at $41.05 per share and $57.1 million of unrealized bond losses outweighed retained profit.
Wealth management fees grew 12.1% from a year ago and 1.5% from last quarter, marking the fourth straight quarter of growth. Alongside a 5.2% quarterly rise in deposit service charges to $15.3 million, wealth management helped cushion the drop in mortgage banking fees.
🔮 Guidance
Cut. The board approved a new $175.0 million share buyback plan running through October 2027 to replace the expiring $250.0 million authorization. The bank bought back $42.6 million of stock in the third quarter, bringing total repurchases over the last four quarters to $190.8 million by our math. The smaller authorization matches the bank's tighter 8.80% tangible common equity ratio as loan growth consumes more capital.
❓ Key Questions
What is the fourth-quarter outlook for loans, deposits and margins?
The earnings release does not include forward financial targets, which management typically gives on the conference call. Investors need to know if the third-quarter lending surge and the $919 million fourth-quarter deposit gap change the full-year mid-single-digit growth plans.
When will the bank fix its internal financial reporting controls?
Renasant disclosed a material weakness in its internal control over financial reporting in its 2025 annual report, and the issue remains in this quarter's risk factors. Management has not yet shared a scope or a target date for fixing it.
Will seasonal public fund inflows replace short-term borrowings in Q4?
Public fund withdrawals of $214.7 million forced the bank to add $491.3 million in short-term borrowings at a 4.86% interest rate. If government deposits do not return in the fourth quarter, wholesale funding costs will keep pressuring the net interest margin.
What caused the single large commercial loan write-off this quarter?
Net loan write-offs jumped to $10.0 million, or 0.20% of average loans, with 0.16 percentage points coming from a single borrower. Knowing the borrower's industry and whether the loan came from an acquisition will show if it is an isolated event.