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Renasant (NASDAQ:RNST)

Q1 2013 Earnings Call

April 24, 2013 10:00 am ET

Executives

John Sidney Oxford - Vice President and Director of External Affairs

Edward Robinson McGraw - Chairman, Chief Executive Officer, President, Chairman of Renasant Bank, Chief Executive Officer of Renasant Bank and President of Renasant Bank

James W. Gray - Chief Revenue Officer, Executive Vice President and Senior Executive Vice President of Renasant Bank

Kevin D. Chapman - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

C. Mitchell Waycaster - Executive Vice President, Chief Administrative Officer of Renasant Bank and Senior Executive Vice President of Renasant Bank

Analysts

Catherine Mealor - Keefe, Bruyette, & Woods, Inc., Research Division

Kevin Fitzsimmons - Sandler O'Neill + Partners, L.P., Research Division

Michael Rose - Raymond James & Associates, Inc., Research Division

Kevin B. Reynolds - Wunderlich Securities Inc., Research Division

Christopher W. Marinac - FIG Partners, LLC, Research Division

Robert Madsen - Stephens Inc., Research Division

Peyton N. Green - Sterne Agee & Leach Inc., Research Division

Operator

Good morning, and welcome to the Renasant Corporation 2013 First Quarter Earnings Conference Call and Webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to John Oxford with Renasant Corporation. Please go ahead.

John Sidney Oxford

Thank you, Ashley. Good morning, and thank you for joining us for Renasant Corporation's First Quarter 2013 Earnings Conference Call. Participating in this call today are members of Renasant's executive management team.

Before we begin, let me remind you that some of our comments during this call may be forward-looking statements, which involve risk and uncertainty. A number of factors could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. Those factors include, but are not limited to, interest rate fluctuation, regulatory changes, portfolio performance and other factors discussed in our recent filings with the Securities and Exchange Commission. We undertake no 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.

And now, I'll turn the call over to Renasant's Chairman and CEO, E. Robinson McGraw.

Edward Robinson McGraw

Thank you, John. Good morning, and welcome to our first quarter 2013 conference call. We are pleased with our strong start in '13, as we increased our net income and EPS for the fifth consecutive quarter. Our results for the first quarter of '13 reflect loan and deposit growth, higher levels of noninterest income and lower credit costs as we experienced significant improvements in our credit quality metrics.

During the first quarter of '13, net income was approximately $7.5 million as compared to approximately $5.9 million for the first quarter of '12. Basic and diluted EPS were $0.30 for the first quarter '13 as compared to EPS of $0.24 for the first quarter '12.

Net interest income was $33.4 million for the first quarter '13, up from $32.8 million for the first quarter '12 and down slightly from $33.9 million at December 31, '12. The slight decrease in net interest income on linked quarter comparison was primarily due to the difference in day counts, with 2 fewer days to record net interest income during the first quarter '13.

Net interest margin was 3.89% for the first quarter '13 as compared to 3.85% for the first quarter '12 and 3.97% at December 31, '12. One factor contributing to the linked quarter decline in net interest margin was the seasonal influx of public fund deposits, which resulted in higher levels of cash. Although these higher cash balances have minimal effect on net interest income, they reduced net interest margin 5 basis points in the first quarter of '13 when compared to the fourth quarter of '12.

Noninterest income was $17.3 million for the first quarter '13 as compared to $16.4 million for the first quarter of '12 and $17.9 million for the fourth quarter of '12. While mortgage income increased for the first quarter of '13 as compared to the first quarter '12, we experienced an expected seasonal decrease in a linked quarter basis. However, our mortgage pipeline steadily increased throughout the first quarter '13 and mortgage production for the remainder of the year is expected to be strong. Noninterest expense was $37.6 million for the first quarter '13 as compared to $36.6 million for the first quarter of '12 and $38.3 million for the fourth quarter of '12. Our increase in noninterest expense on a year-over-year basis was primarily due to the de novo expansions, commissions paid on the increased volume of mortgage loan production and increased insurance costs. The decrease in noninterest expense on a linked quarter basis was primarily driven by a reduction in expense related to OREO.

Total assets as of March 31, '13 were approximately $4.27 billion as compared to $4.18 billion as of December 31, '12. As of 3/31/13, our Tier 1 leverage capital ratio was 9.79%, Tier 1 risk-based capital ratio was 12.86% and total risk-based capital ratio was 14.13%. In all capital ratio categories, our regulatory capital ratio has continued to be in excess of the regulatory minimums required to be classified as well capitalized. In addition, our tangible common equity ratio was 7.65% as of March 31, '13.

Loans not covered under FDIC loss-share agreements were $2.59 billion as of March 31, '13 as opposed to $2.28 billion as of March 31, '12 and $2.57 million as of December 31, '12. Loans covered under loss-share agreements decreased at $214 million as of March 31, '13 as compared to $318 million as of March 31, '12 and $237 million as of December 31, '12.

Our moderate loan growth during the first quarter of '13, excluding the decline in covered loans, reflects not only the cyclical slowing we typically experience during this time period, but also higher levels of pay downs, including approximately $20.4 million in principal reductions on problem credits.

Looking ahead, our loan pipelines and opportunities for growth throughout all of our markets project more pronounced loan growth during the remainder of 2013. I would also point out that we continue to experience success with our de novo market entries. At quarter end, loans and deposits at our de novo locations totaled $225 million and $155 million, respectively, evidencing the success we have achieved in these markets. We are especially pleased with our recently opened East Tennessee locations as they already have $76 million in loans and $31 million in deposits in approximately 1 year's time. Our Knoxville, Maryville, MSA de novo location was profitable within 7 months of opening, and we anticipate our Jonesboro, Bristol and Johnson City de novo locations, which we opened later to follow a similar timeline to achieve profitability.

Total deposits were $3.56 billion as of March 31, '13 as compared to $3.47 billion as of March 31, '12 and $3.46 billion as of December 31, '12. We continue to improve the funding -- the cost of our funding. We reduced our cost of funds 22 basis points to 62 basis points for the first quarter '13 as compared to 84 basis points for the first quarter of '12. Our cost of funds was 64 basis points for the fourth quarter of '12.

Looking at our credit quality metrics during the first quarter '13, we experienced significant improvement in nonperforming loans, early stage delinquencies and our coverage ratio as compared to both the year-over-year and linked quarter basis.

Net charge-offs totaled $893,000, which represents the lowest quarterly charge-off level that we've seen since the third quarter of 2007. Annualized net charge-offs as a percentage of average loans were 13 basis points for the first quarter '13 as compared to 77 basis points for the first quarter of '12 and 53 basis points for the fourth quarter of '12.

We recorded a provision of loan losses of $3.1 million for the first quarter of '13 as compared to $4.8 million for the first quarter of '12 and $4 million for the fourth quarter of '12. The allowance for loan losses totaled $46.5 million at March 31, '13 as compared to $44.2 million at March 31, '12 and $43 million at December 31, '12. The allowance for loan losses as a percentage of total loans was 179 basis points at 3/31/13 as compared to 172 basis points at year end.

Consistent with our lower level of charge-offs and improved risk profile from the previously mentioned $20.4 million in principal reductions of problem credits, we experienced a reduction in our provision for loan losses as compared to previous periods. Although we saw a decrease in our provision for loan losses, we did experience an increase in our allowance for loan losses, coverage ratio and ratio of allowance to total loans.

Total nonperforming loans, which include nonaccrual loans and loans 90 days or more past due were $76 million at 3/31/13, while total nonperforming assets, which include nonperforming loans and OREO were $150.8 million during the same period. Nonperforming assets covered under FDIC loss-share agreements totaled $83.1 million at 3/31/13, down significantly from the $115.3 million at 3/31/12 and $98.7 million at year end. Nonperforming loans and OREO covered under FDIC loss-share agreements totaled $48 million and $35.1 million, respectively, at 3/31/13 as compared to $79.8 million and $35.5 million, respectively, at the 3/31/12 and $53.2 million and $45.5 million, respectively, at year end. The remaining discussion on nonperforming loans, OREO and the related asset quality ratios exclude these assets covered under FDIC loss-share agreements. Our nonperforming loans were $28 million at 3/31/13, down from $30.2 million at year end. Nonperforming loans as a percentage of total loans improved to 1.08% at 3/31/13 as compared to 1.33% at 3/31/12 and 1.17% at year end. Our coverage ratio or our allowance for loan losses as a percentage of nonperforming loans also improved to 166.19% at 3/31/13 as compared to 146.90% at year end.

Loans 30 to 89 days past due as a percentage of total loans remained at prerecession levels and were at 32 basis points at 3/31/13 as compared to 59 basis points at 3/31/12 and 31 basis points at year end. OREO was $39.8 million at 3/31/13 as compared to $64.9 million at 3/31/12 and $44.7 million at year end. We continue to aggressively dispose of OREO and currently have approximately $5.9 million in OREO under purchase agreements, which are expected to close during the second quarter of '13.

During the first quarter of '13, we experienced a significant reduction in costs associated with OREO as OREO expense decreased approximately 50% compared to the first quarter of '12. We are especially pleased to continue to see positive trends and a significant improvement in our credit quality. During the first quarter of '13, nonperforming loans decreased 8.1% and 7.3% on a year-over-year and linked quarter comparison, respectively. And nonperforming assets decreased 28.9% and 9.5% on a year-over-year and linked quarter comparison, respectively.

In addition to our strong financial start this year, during the first quarter '13, we also announced our plans to acquire First M&F Corporation, a bank-holding company headquartered in Kosciusko, Mississippi and the parent of Merchants and Farmers Bank, a $1.6 billion financial services company with 36 locations in Mississippi, Alabama and Tennessee. This will be the largest merger in our company's history. And upon completion of the transaction, our pro forma combined company will have approximately $5.8 billion in total assets and 123 locations.

As we look towards the remainder of '13 and beyond, we see many positives on the horizons as our pipelines for both commercial loans and secondary market mortgage loans have returned to robust levels. We're beginning to experience the full benefit of our DeSoto -- excuse me, of our de novo market entries, and our credit quality continues to move back toward healthier prerecession levels. Concurrently, we're working with our new partners at First M&F Corporation to ensure the foundation is in place for smooth merger and conversion, which we expect to be completed during the third quarter of 2013. Now actually I'll turn it back to you for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Catherine Mealor of KBW.

Catherine Mealor - Keefe, Bruyette, & Woods, Inc., Research Division

Robin, you mentioned that although mortgage reduction slowed a little this quarter, you expect it to be strong to the rest of the year. Can you talk a little bit about your refi versus purchase mix and some trends you're seeing in the purchase volume going over the rest of the year?

Edward Robinson McGraw

Sure, Catherine. I'll let Jim Gray answer that.

James W. Gray

Our refi percent is about 65%, which it's remained steady at that. We anticipate our purchase volume to pick up. We've hired 5 new originators during the first quarter in Birmingham, East Tennessee, Huntsville and in Mississippi, and we anticipate volume coming out of them as well as just a seasonal pick up in purchase volume going forward.

Catherine Mealor - Keefe, Bruyette, & Woods, Inc., Research Division

Great. And then maybe a question on the margin. Do you have the loan yields for the first quarter? And what this did linked quarter?

James W. Gray

Yes. The margin, we had about a 9 basis point decline in margin. And as we have mentioned, about 5 basis points of that was due to the excess cash that we had on hand due to the seasonal increase in deposits, partially in public funds and then in some other deposits as well. We were holding over $100 million in cash. We also had increased our investment portfolio somewhat. The remainder of the 9 basis point decline was a combination of -- actually, the decrease in our cost of funds did not entirely offset the reduced loan and investment yield.

Catherine Mealor - Keefe, Bruyette, & Woods, Inc., Research Division

And do you have that loan investment yield for the first quarter?

James W. Gray

I do. The average loan yield for the first quarter was 4.92%.

Edward Robinson McGraw

Catherine, let me point out, too, that another area for our retail production in mortgage loans is we've opened up a new location in the Cahaba Heights area of Birmingham. So we anticipate that being another positive. Jim, you may want to...

James W. Gray

Yes, Robin, thanks for mentioning that because I did want to comment on that. That's in a very good -- the Cahaba Heights area of Birmingham is a very strong economic area. But in addition to that, we have a strategic alliance with a real estate firm, ARC Realty, which is a reforming real estate agency there, a top real estate agent. They had a top real estate firm in Birmingham that's reforming a real estate agency, and they've asked us to be a strategic partner with them where we located. They're actually located upstairs from us in the -- in our office location in Cahaba Heights. So we have about 4 -- 3 originators and a processor and another assistant in that office, and we expect some large volumes coming out of that office.

Operator

And our next question comes from Kevin Fitzsimmons with Sandler O'Neill.

Kevin Fitzsimmons - Sandler O'Neill + Partners, L.P., Research Division

Robin, you know in the past quarters, Renasant has been more of an outlier in terms of the magnitude of loan growth you guys have had, which I think a lot of that reflected the de novo entries and the progress you were making, and then now you have the slower pace of growth this quarter, but it seems like it's not all that much different from what we're seeing out in the industry. So I just want to -- that all being said, I want to get behind what's really driving your expectation for more pronounced loan growth over the balance of the year. Is it another ramp up or leg up in the de novo entries? Is it just your core pipelines that are getting better? And if all that is so, is there a cost to the margin from that because we're hearing from everywhere that pricing competition is very tough. So very long-winded question, but it generally is asking kind of how you think about NII going forward?

Edward Robinson McGraw

Let me make a couple of comments and then I'm going to let Kevin and Mitch both make comments in this regard. Basically, our production for the first quarter of '13 was on par with the first quarter of '12. Our pipeline -- our 30-day pipeline, for example, for our second quarter, the first 30 days in the second quarter is actually a little ahead of last year's second quarter pipeline and pretty much on par with the originations were on a quarterly basis. If you carry it out for 3 quarters. We have very strong 60- and 90-day pipelines in comparison of what we've had in the past. But based on that, we anticipate from historical analysis that we should be somewhere on par with where we were last year second quarter. Also, going back to this first quarter, we -- to some degree, it was a very positive anomaly in that we had some big pay downs on some problem credits. We also had some good credits that were paid down, too, that were based on cash buildups in the companies that not necessarily another buying taking of where those loans. So with all that in mind, we have a positive outlook as far as the future. And I'm going to let Kevin make a comment and back to Mitch to talk a little bit more about -- more color on the pipeline.

Kevin D. Chapman

Yes, Kevin. Just in response to your comment about -- is future de novo is going to drive the growth? I'd say no. We don't currently have any initiatives as far as new de novos. Now what we have been doing, and this has been consistent for the last 3 years, in existing markets, we have been hiring new individuals, new teams. They will bring books of business with them. That is driving some of the growth, although not all of it. But as we look at net interest income in the future, we are projecting higher levels of net interest income. And going to your competitive comment, we are seeing, we're feeling, the competitiveness in the loan space. However, our production, we do have certain goals that we expect as far as new production with rate and term and to the extent that those aren't acceptable, then in some cases, we are letting those loans walk or we're not closing those loans in the pipeline. But as we look at our new and renewed production during the first quarter, we were able to maintain new and renewed yields consistent with what we saw last year in the mid-4s. And that's in line with what we were seeing last year.

Kevin Fitzsimmons - Sandler O'Neill + Partners, L.P., Research Division

Kevin, are there any specific markets where you're hiring these individuals and these teams where you really see the most opportunity?

Kevin D. Chapman

Not any specific market. We've done hires. We've executed hires basically throughout all of our markets over the course of the last 12 months. So it's not any one specific market.

Edward Robinson McGraw

Mitch can give you a little bit more color, too, Kev.

C. Mitchell Waycaster

Kevin, to drill down more on the 30-day pipeline, which reflects what Kevin was just explaining, the current 30-day pipeline sits $67 million. If you break that down by state, 45% would be in Tennessee, 22% in Alabama, 12% in Georgia and 21% in Mississippi. And this current pipeline should result in approximately $25 million in growth in noncovered loans in the next 30 days. And as Robin mentioned earlier, it's returning to the levels that we saw in the second and third quarter of '12, and the current pipeline is projecting production that we experienced in the second quarter of '12.

Edward Robinson McGraw

Kevin, let me go back, and then -- one other thing talking about the de novos. Our East Tennessee de novos are pretty young. And so, therefore, we do expect, as Mitch pointed out, 45% of our pipeline was in Tennessee, a good portion of that is also in that East Tennessee market. We're also seeing some real positive things happening in Nashville. Most -- last quarter, most of the pay downs we had came in Nashville either on the problem credits side, plus one very good customer had a very large pay down because of an abundance of cash in his business. But in East Tennessee, we've already seen a short order, the Johnson City, Jonesboro area, Jonesboro being a branch location for Johnson City office that we've only been opened there for just a few months and we already had $23 million in loans there at the end of March, and we were up close to $10 million in deposits. Our loan production office in Bristol was already up to $12 million. It, too, is very young. These were established, I think, 2 of them in late fourth quarter and one in the early first quarter of this year. So we're just now starting to see some real positive activity in those locations.

Operator

And our next question comes from Michael Rose of Raymond James.

Michael Rose - Raymond James & Associates, Inc., Research Division

I just wanted to get some context on the reserve build this quarter. It seems like most of the credit metrics continued to move in the right direction and the pipeline of OREO sales looks like it's up quarter-to-quarter. Can you give some context there? And just kind of explain the rationale for the reserve build?

Edward Robinson McGraw

Sure. Kevin, do you want to make a comment?

Kevin D. Chapman

Yes. Michael, I think can go back and look at previous transcripts and in prior conversations, I think we've indicated that it's our intention to maintain an adequate reserve. And there's not any -- we're not seeing specific credit issues within our portfolio. Our concern and purpose for the reserve build is more macroeconomic concerns. We feel very strongly about our markets. The markets that we're in are performing well -- are performing better in most cases of national averages, although we just have some concerns about low interest rates and what's fueling economic growth. And in the future, if that were to turn very quickly, the impact it could have on certain segments of our portfolio.

Michael Rose - Raymond James & Associates, Inc., Research Division

Okay. And then if I could just swing back to the margin. Obviously, the excess liquidity this quarter impacted the margin. But I think you had given some guidance previously for compression for the rest of the year. Does that same guidance that you gave previously still kind of hold?

Edward Robinson McGraw

Yes. That guidance will hold, Michael.

Operator

And our next question comes from Kevin Reynolds of Wunderlich.

Kevin B. Reynolds - Wunderlich Securities Inc., Research Division

Quick question, good quarter. Most of my questions have been answered. I think it's fairly straight forward. The one question I have is, I guess, more conceptual here looking out. I know there's no correct answer. But I just wanted to get your comments and thoughts on this. Net charge-offs down, I think, you said to the lowest level since third quarter of '07. Do you think that it's possible for your company and then possibly even for some of the better positioned companies out there in the industry as a whole to experience net charge -- or to continue to see net charge-offs decline or possibly even experience a period of recoveries, given how the marks that you took on loans earlier in the cycle? Or do you think we're going to probably go sideways from here for a little bit before charge-offs start to inch higher, I guess, several quarters out? What do you think about that?

Edward Robinson McGraw

I think, to our own company in particular, I believe that we're at a level that we will stay for a while. I think we'll see significantly lower charge-offs this year than last year as we have said. And I do think first quarter is somewhat indicative of the future based on what we see today in that particular regard. I don't anticipate net recoveries, but I do anticipate recoveries impacting charge-offs to the extent that charge-offs will be much lower than what you've seen in our company in the past. Now I can't speak to other companies in that regard though, Kevin.

Kevin B. Reynolds - Wunderlich Securities Inc., Research Division

Okay, okay. But -- I mean, this is not just one quarter dip. We're probably going to stay very low for a fairly long period of time, barring some big change in the overall economic environment?

Edward Robinson McGraw

I believe that's correct. From our perspective, as we look -- our nonperforming loans continue to decline. Quite frankly, we're starting to get some positive action in the bankruptcy courts as far as maybe getting some stays lifted on some property that we really don't have any losses of any significance and that we can kind of push on through the system possibly without even going through the OREO bucket. So I think things are, in fact, looking somewhat better for us, and I would assume for quite the other companies.

Kevin B. Reynolds - Wunderlich Securities Inc., Research Division

Okay. And then one question. I sort of ask this, it seems, every quarter or something about this. But recent legislation out of the State of Tennessee that was passed on municipal schools that would impact Shelby County. Do you think that, that -- does that change the outlook for kind of the housing market? And maybe even construction loans in DeSoto County or in Shelby County to the extent that you're participating there?

Edward Robinson McGraw

We don't see any negative impact in the greater Memphis area. I think, again, that there's probably a positive, if you would anticipate, somewhat of a positive impact in DeSoto County. And quite frankly, as we look at the pipeline of OREO sales, for example, that Memphis MSA, both sides of the line of Tennessee and Mississippi are very key players in that $5.9 million.

Operator

And our next question comes from Chris Marinac of FIG Partners.

Christopher W. Marinac - FIG Partners, LLC, Research Division

I wanted to ask a little about the -- just a reminder on the integration of First M&F and the timing on the systems conversion and also kind of how long in general you think it will be to get that fully integrated.

Edward Robinson McGraw

We're still anticipating a third quarter merger. Conversion is still contemplated in the fourth quarter. And we don't anticipate any extended integration period as far as that goes from that standpoint, Chris.

Christopher W. Marinac - FIG Partners, LLC, Research Division

Okay. And then, I guess, sort of next question, I'm sort of thinking out loud a little about where efficiency gets post First M&F. And I guess is there a goal that you have in mind or maybe just even sort of a general trend after you get that integrated on where expense is relative to the rest of revenues and expenses may be?

Kevin D. Chapman

Chris, we think once fully implemented and that, that would include the anticipated cost saves, so we're looking at 2014, that should be in the mid to low 60s.

Christopher W. Marinac - FIG Partners, LLC, Research Division

Okay. And then from there going forward, you'll hold there? Or would you envision that gets better over time?

Kevin D. Chapman

It would get better over time.

Operator

And our next question comes from Robert Madsen of Stephens.

Robert Madsen - Stephens Inc., Research Division

Just following up on that last question on the FMFC acquisition. Do you still feel good about the 25% targeted cost saves? Or have you been able to identify additional cost saves?

Edward Robinson McGraw

I think the best answer to that, Robert, is we're still very comfortable with what our projections were when we announced.

Robert Madsen - Stephens Inc., Research Division

Okay. And also just trying to get a sense of what your appetite is right now for deals, further M&A or are you guys going to be sidelined with this acquisition for a while?

Edward Robinson McGraw

Because of the size of this merger, we obviously don't anticipate anything the remainder of 2013. It would be a 2014 event, probably not first quarter in '14 or so. So sometime next year, I think we would be in a position that we could contemplate some opportunities but not before then.

Operator

And our next question comes from Peyton Green of Sterne Agee.

Peyton N. Green - Sterne Agee & Leach Inc., Research Division

I apologize if I missed this earlier. But Kevin, I was wondering if could you talk about maybe what you think the effect of competitive conditions might be on the margin going forward? I know it seems like everywhere even in markets that have been more affected by the cycle, we’re starting to see more pricing pressure for renewal of credits. And I was just wondering what you thought would be a good amount of margin pressure going forward for that?

Kevin D. Chapman

Peyton, we're -- your comment about seeing a competitiveness throughout all the markets, we're seeing that. What started 18 months ago, mainly isolated in Nashville, we're starting to see in almost all of our markets now, and that is putting more pressure on the margin. We are still holding to our guidance that we will compress. We will compress margin but with abilities to grow loans. We still are optimistic about that. We still feel that we have opportunity on the liability side to reprice and pick up additional savings on the funding costs. So we really haven't changed our guidance. We're still anticipating that we can grow net interest income, but that margin will be compressing as we move throughout the year.

Peyton N. Green - Sterne Agee & Leach Inc., Research Division

Okay, great. Just as a reminder, is there any particular period of time where you would expect the positive repricing to be more beneficial over the next couple of quarters or through the balance of '13?

Kevin D. Chapman

As we look out, for the most part, it's going to be fairly steady. There will be some ebbs and flows. I know our Georgia portfolio of time deposits towards the latter part of the year. There are some higher costing CDs that roll out. But it won't significantly move the needle.

Peyton N. Green - Sterne Agee & Leach Inc., Research Division

Okay. And then thinking about provision, and you touched on this earlier, but, I mean, I guess provision less charge-offs clipped EPS by about $0.06 in the quarter. I was just wondering if charge-offs were expected to stay low, would you expect the provision to move down towards charge-offs over the balance of the year? Or is it really a function of maintaining a reserve on marginal loan growth plus the charge-offs?

Kevin D. Chapman

It would be a combination of all. We look at the allowance from several facets. Charge-offs is one of those, one of those inputs. But I think it is safe to say that as charge-offs stay at a lower level that provision, provisioning will trend in that direction, and also augmenting any loan growth that we have as well.

Operator

This concludes our question-and-answer session. I would now like to turn the conference back over to E. Robinson McGraw, Chairman and CEO, for any closing remarks.

Edward Robinson McGraw

Thank you, Ashley. We appreciate everyone's time and interest in Renasant Corporation, and we look forward to speaking with you again in the future. Thank you, everyone.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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