Renasant Corp

NYSE:RNST

Earnings Call Transcript 2024-Q3

[Operator]

Good day, and welcome to the Renasant Corporation's Third Quarter Earnings Conference Call and Webcast. [Operator Instructions]. Please note, this event is being recorded. I would like now to turn the conference over to Kelly Hutcheson, Chief Accounting Officer for Renasant. Please go ahead.

[Kelly Hutcheson, executive]

Good morning, and thank you for joining us for Renasant Corporation's 2024 Quarterly Webcast and Conference Call. Participating in the call today are members of Renasant's 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. And now I will turn the call over to our Executive Vice Chairman and Chief Executive Officer, Mitch Waycaster.

[Mitchell Waycaster, executive]

Thank you, Kelly. We are pleased with the results for the third quarter. They reflect solid financial performance, the sale of our insurance agency and the issuance of common equity earlier in the quarter. I want to acknowledge the hard work by our team to remain focused on our core operations while contributing to the successful achievement of a number of significant transactions for the company.

Turning to the merger with The First. A few weeks following the merger announcement, we filed applications with regulators seeking approval for the combination. And yesterday, shareholders of both Renasant and The First approved the merger. We believe we have made solid progress on the other tasks necessary to complete the merger, and we still expect the closing in the first half of 2025 followed by a conversion in August. I will now turn the call over to Kevin for comments on financial trends in the quarter.

[Kevin Chapman, executive]

Thank you, Mitch. Before discussing our results for the quarter, I would like to echo Mitch's praise of Renasant team members for their outstanding efforts in the third quarter. I've been tremendously impressed by our employees' abilities to both successfully execute their day jobs while also contributing meaningfully to the work necessary to successfully bring Renasant and The First together.

We're well underway in our integration plan to come together as one company, and we have not yet identified any operational issues that would interrupt our plans. I will now turn our attention to the third quarter financial results of Renasant. Our reported earnings were $72.5 million or $1.18 per diluted share. Included in these results is the after-tax gain on the sale of the assets of our insurance agency of $39 million or $0.63 in diluted EPS. As well as after-tax merger and conversion expenses of $9.5 million or $0.15 in diluted EPS.

Excluding these items, our adjusted earnings for the quarter were $43 million or $0.70 in diluted EPS compared to $0.69 in diluted EPS for the second quarter. Net interest income increased $6 million on a linked-quarter basis. Some of this increase was driven from interest earned on the proceeds from our capital raise, but the remainder is attributable to the increase in loan yields outpacing the increase in deposit costs.

Our team continues to be diligent in our loan pricing with yields increasing 6 basis points on a linked quarter basis, but the success of the team is truly evident on the liability side of the balance sheet. Traditional deposits increased over $285 million from the second quarter. Equally important to note, noninterest-bearing deposits were flat quarter-over-quarter. Although pricing for deposits remains competitive throughout our footprint, the continued hard work in managing our deposit base has paid dividends.

Our total deposit costs increased only 4 basis points during the quarter compared to an increase of 12 basis points during the second quarter. Reported noninterest income increased $50.5 million from the second quarter, excluding the aforementioned gain on the sale of the insurance agency, adjusted noninterest income decreased $2.8 million quarter-over-quarter primarily due to insurance commissions foregone as a result of the sale.

Income from our mortgage division decreased $1.3 million on a linked-quarter basis. Overall volume was relatively flat. However, an increase in the fallout percentage of our pipeline as rates begin to fall during the quarter, coupled with a decrease in the gain on sale margin of 13 basis points were the primary drivers of the decline in revenue from the second quarter. Reported noninterest expense was $122 million for the third quarter. Excluding merger and conversion expenses of $11.3 million on a pretax basis, noninterest expense was $110.7 million for the quarter representing a decrease of $2.2 million on a linked-quarter basis.

Discipline around expenses and leveraging our existing expense base continue to be top priorities as we progress toward integration with the first. I will now turn the call over to Jim.

[James Mabry, executive]

Thank you, Kevin. As we walk through the quarter's results, I will reference slides from the earnings deck. Total assets grew $450 million due in large part to the proceeds from our capital raise and the sale of the insurance agency. Loan growth in the second quarter was $23 million. Loan production was strong during the quarter, but we experienced higher levels of pay downs which resulted in the lower growth.

On the liability side, we experienced another quarter of strong core deposit growth, which allowed us to continue to shift away from non-core funding sources. Referencing Slide 8, all regulatory capital ratios are in excess of required minimums to be considered well capitalized. The capital raise, gain on sale of the insurance agency and retained earnings contributed to a meaningful increase in these ratios on a linked-quarter basis.

Turning to asset quality. We recorded a credit loss provision on loans of $1.2 million. Net charge-offs were $703,000, and the ACL as a percentage of total loans remained flat at 1.59%. Asset quality metrics are presented on Page 9. Our criticized loans and total nonperforming assets increased due to the downgrade of a few larger loans. We believe these loans are adequately reserved. Our strategy remains to proactively identify underperforming loans early and work quickly towards resolution in order to mitigate loss.

Our profitability metrics are presented on Slides 10 and 11. Excluding onetime items, all profitability metrics with the exception of return on tangible equity improved from the second quarter largely due to growth in net income and discipline around expenses. The capital raise had a negative impact on ROTCE. Turning to Slide 12. Adjusted net interest margin, which excludes purchase accounting accretion and interest recoveries increased 3 basis points to 3.32% for the quarter. interest earned on the proceeds from our capital raise and the sale of the insurance agency contributed to the growth in net interest income and margin.

And the good work by our team to grow core deposits and remain diligent in pricing continued a trend of declining increases in rates. We continue to focus on growing the core funding base. Kevin commented on the highlights within noninterest income and expense. We expect the balance of the year to include additional expenses related to the proposed merger with The First, but we remain committed to improving the profitability of Renasant on a stand-alone basis. I will now turn the call back over to Mitch.

[Mitchell Waycaster, executive]

Thank you, Jim. As you have heard, we had a very active quarter but do not want the noise of this activity to drown out the success we had during the quarter to improve the underlying financial performance. Our adjusted efficiency ratio decreased 198 basis points, and our adjusted return on average assets increased 7 basis points on a linked-quarter basis. We are enthusiastic about the opportunities ahead for Renasant as we work to create a top-performing bank operating in some of the Southeast most vibrant markets. I will now turn the call over to the operator.

[Operator]

We will now begin the Question and Answer session. [Operator Instructions]. Our first question comes from Catherine Mealor of KBW.

[Catherine Mealor, analyst]

I could just start on the margin, nice expansion this quarter. I'm just curious, as we think about -- next quarter will be helpful, but even as we kind of get how to think about your margin just with potentially more rate cuts coming than we previously have been talking about? And then maybe kind of, if you could help us think about Renasant as a stand-alone and then with FBMS as well what that does to your margin outlook.

[James Mabry, executive]

Good morning, Catherine. This is Jim. So I think we've talked the last couple of quarters, we're -- as we have these rate cuts, at least in the intermediate or near term, those cuts are going to have a modestly negative impact on margin and still feel that way. So if we see two more cuts in Q4, I mean the impact on it. But the 50 basis point cut that we've had, we generally see that having a modest negative impact on margin.

Now that smooths out over time, but near term, that would be the case. '25 is -- there's a lot to wrap our arms around there. certainly stand-alone, but when you add The First to that mix, I think we talked about some previously. I mean The First is less asset sensitive than we are, so I would say at the top of the house, that's going to help our NIM response to further rate cuts in '25. Generally, they're going to moderate the negative impact, but to speak to -- I mean, I'm not quite sure how NIM is going to behave because it will depend upon the size and the pace of those cuts. And then you can look at first in there, there's just a lot to think through. So '25 is -- we'll see how that plays out. But near term, again, going to your first part of your question, we do see some modest negative impact in the short term on NIM.

[Catherine Mealor, analyst]

On the deposit side, can you talk about what you've seen so far on your deposit cost just with the 50 basis point cut. It was too late in the quarter to really see the impact in the third. But curious, you've got kind of spot rates or just kind of what data you're seeing so far?

[James Mabry, executive]

We've been really pleased with our deposit behavior. I think about, we started the beginning of the year and we went through budgeting and sort of '24 numbers and what we thought was going to happen. We envisioned a very tough environment for noninterest-bearing deposits. And we thought we would see meaningful runoff there. And in fact, it's -- they're essentially pretty close to flat for the year. And I think this is the -- I think it's the fifth consecutive quarter that we've seen deposit growth outpace loan growth.

And we certainly would like to have more loan growth. But the deposit trends have been really good. We started cutting our specials back in June. I think we're down -- I think our 5-month special is around 4.25%, and that was 100 basis points higher in June. So we've been able to cut rates and certainly think we're heading into environment, we're going to see more benefit there. So deposit base has behaved really well and much better than we thought. So I'm optimistic on the deposit side.

[Operator]

The next question comes from Michael Rose of Raymond James.

[Michael Rose, analyst]

Maybe just going back to the loan question before. I think we've seen a lot of banks see relatively muted growth this quarter, a lot are kind of citing uncertainty around the election and the economy and things like that, but still pipelines are good, Mitch, I was wondering if you could kind of give us your usual pipeline breakdown and kind of at least what you would expect to see from a debt growth perspective and if there's any paydowns upcoming that we should be aware of?

[Mitchell Waycaster, executive]

So as you suggested, we'll start with the pipeline, and we go into the quarter at $176 million, which is a good increase over where we started 3Q at $130 million. It's also Jim mentioned earlier in his opening comments that we saw good production, and we did. Actually, production within the quarter was $507 million up from $390 million. I think both the pipeline and the production, which grew throughout the quarter, and we saw pipeline growing throughout the quarter. I think, again, is just a testament to the good vibrant resilient markets that we're operating in.

Back to your other question in point brings us to payoffs. And what we did see this quarter were a modest increase in payoffs. They went up to $551 million. The prior quarter was $410 million. If you look at the previous 4 quarters, that average would be $400 million. I believe the change in rate there, we saw some sale of business. We saw some seasoned commercial real estate projects that acted on being able to move out to secondary market. We saw private equity funds active in some of the sale of business. It's likely in the rate environment that payoffs could be moving up some as we go into future quarters. I think for Renasant though, it comes back to our ability to produce in the markets which [indiscernible] go through percentages of each market.

But if I did, you would see a pretty broad-based both in the pipeline and production representation across the market. And as I usually comment is, I think as important as the geography, it's the types. Again, this past quarter of that $507 million just under 15% of that was in consumer 1-4, those that we would hold on portfolio, but another, and we always do well here, another 26% was in that small business, business banking, I would say, less than $2.5 million in size and then commercial credits above $2.5 million, C&I-type credits, owner-occupied commercial real estate represented about 28%.

And then in our corporate banking larger C&I, commercial real estate, asset-based lending, equipment finance, SBA factoring a number of business lines contributing with an additional 34%. All of that to say, our average loan size remains in the $300,000 range. So we just -- we continue to hit on many different cylinders. So both geographically and by product type, and we're doing that while remaining disciplined in our pricing and our underwriting, Jim commented on the granularity of our deposit base, that's true of our loan base of our asset base.

And we do remain optimistic as we go forward with our ability to continue to grow a diversified loan and fund it with a diversified deposit portfolio. And coming to your last question, just looking forward, I would continue to say much like we've seen this year in the low to mid-single-digit net, which the variable there will be payoffs, what we see in coming quarters.

[Michael Rose, analyst]

Mitch, that's great color as always very, very helpful. Maybe as a follow-up, just because I got a headline that home sales hit the lowest level since 2010 and mortgage rates have actually moved higher over the past couple of weeks. Kevin, if you can just give us kind of an update on the mortgage business and kind of the trends that you're seeing there. And then assuming that we get some future additional rate cuts, I would expect, hopefully, that you'd see a pickup in activity, but just wanted to get some -- just broader color from you.

[Kevin Chapman, executive]

Yes. No, Michael, thank you for the question. I think you summed it up well as we've seen the short end of the curve come down. what isn't talked about maybe as much or received as much attention is how the longer end of the curve or the midrange of the curve, continues to remain flat, if not tick up a little bit. So it's good that we have steepness in the curve. I think that helps us from a banking standpoint, but it absolutely puts pressure on mortgage.

So mortgage continues to be a tough environment where we saw a pullback in rates early on in Q3. We that -- some of that momentum abated a little bit as we got towards the end of the quarter. We still are -- we still have a pipeline. It hasn't gone to 0 we're seeing activity. It just continues -- the pipeline isn't as build -- It isn't building as much as maybe we expected on the anticipation of the Fed cutting rates. But to your question, if rates of longer-term rates come down, we do expect an uptick in mortgage activity, and that should flow.

And we do think, as we've been talking about, what we've done to rebuild our mortgage team, our production. We continue to be successful in hiring production talent throughout our markets, we expect that to be immediately realized as rates cooperate.

[Michael Rose, analyst]

Okay. Great. And maybe just one final quick one. The deal, the first acquisition expected to close in the first half of next year. I know it's hard to predict these things, but glad to see the shareholder votes. Any sort of refinement of when we could potentially see the acquisition close, either first or second quarter at this point? Or is it just too soon still to really understand?

[Mitchell Waycaster, executive]

So Michael, I think it's more of the latter, commented in the beginning just about the shareholder approval, which we both received yesterday. We -- we're some 80 days at this point past the announcement and some 60-plus days past actually the application. And we're early in the process. But as I commented earlier, we've made solid progress on the tasks necessary to complete the merger. And of course, you mentioned the shareholder vote, which both received yesterday, but Things are going well. We still expect closing in the first half of 2025 pending regulatory approvals and, of course, followed by conversion in August.

[Operator]

The next question comes from Matt Olney of Stephens.

[Matt Olney, analyst]

Yes. going back to the margin discussion. I was hoping to dig into the fixed asset repricing dynamic. Any more color you can provide on that fixed variable rate loans that will be repricing higher over the next few quarters? And specifically, I'm just looking for the dollar amount of these loans. I don't know, Jim, if you have a 3-month or a 12-month schedule, just looking for the dollar amount of that and then also on the yield side, kind of what they've been using more recently and color on kind of the new yields on that?

[James Mabry, executive]

Matt. So yes, hopefully, this will be helpful. So in terms of variable and adjustable at least in the near term, we're talking about roughly $5.5 billion on the loan side that we price. And I think that variable book today is yielding somewhere in the mid-7s. And if you look at our new and renewed. We've been, I think, in Q3, we're sort of upper 7s. So I don't know how that will play out exactly, but that will give you a sense for the repricing. On the fixed rate side, we do have, call it, $750 million or so that reprice over the next 12 months.

That piece of the fixed book is carrying about a 5% yield. And I think about that, plus we've got a couple of hundred million dollars of securities that will generate a couple of hundred million dollars in cash flows and that book is yielding about 2%. and I know you didn't ask this, but I sort of think about, all right, what's sort of the flip side of that? And that's the deposit pricing. And we've got about not quite $4.5 billion of funding and including that a small piece of our -- the floating rate debt part of our funding that repriced immediately. So those are some of the offsets and hope that's helpful as you think about margin.

[Matt Olney, analyst]

Yes, Jim, that's helpful. I appreciate the details there. And I appreciate there are several moving parts there, but it sounds like based off your previous commentary, you are expecting a little bit of margin compression in the first quarter as the balance sheet digest the Fed move from September. Any way you can size it up for us as far as what to expect in the fourth quarter?

[James Mabry, executive]

I'm going to go back to the description of modest, Matt, because even though it's -- even though we're well into the quarter, predicting how that's going to play out is still, I think, more of an art than a science. But I don't think it's significant or material, but I do think it makes sense for us to think about there will be some modest contraction.

And then in Q1 if we had no further rate cuts, that would start to sort of even out and plateau, but of course, '25, at some point, we'll have The First in the mix, and we'll also have a better sense of further cuts in the magnitude of those cuts and the timing. So it's -- '25 is -- the outlook there is cloudy in terms of how that's all going to piece together. But again, near term, I don't want to be precise about it, but I do think there's some modest contraction in that margin.

[Matt Olney, analyst]

Okay. No, I appreciate that, Jim. Definitely several moving parts. So I appreciate the -- just the general commentary. I also want to ask about credit. I think there was a mention in the prepared remarks about the downgrade of a few larger loans. Just any more color you can provide on those downgrades as far as industry or any themes?

[David Meredith, executive]

Matt, this is David. Those asset class or the asset classes, I guess, that we're seeing, we've seen stress in and we continue to see stress. And they've been -- they were dominated by loans in the senior housing space over three loans in the senior housing space and one loan in the non-medical office space that really comprise the downgrade for the quarter. So it's -- as Jim mentioned in the opening comments, it's a few loans that continues to be in the asset classes that we've seen some level of stress. We continue to monitor those loans aggressively to make sure we're looking forward to performance and so we can recognize those problems and work them out of the bank.

Yes. So I would say those -- and I found it not just of the senior housing, if you took that asset class out of our criticized loans, that number dropped materially from a little over 3% to about 2.1%. You can see there's a stress level in one asset class. And so we think it's pretty isolated. It hasn't gone across to other asset classes at this point.

[Operator]

Our next question comes from David Bishop of the Hovde Group.

[David Bishop, analyst]

Yes, good morning, gentlemen. Curious staying on that, the credit quality topic, obviously, some good capital inflows from the insurance sale. Just curious, it's a simple answer, the CECL accounting or the accounting prevents this, but maybe why not plow a little bit more of that back into the reserve or provision given the recent trends in criticized and classified? Or is that maybe commentary on the reserves already provided or loss potential, maybe just thoughts there on the provision and reserve.

[David Meredith, executive]

David. When we ran our CECL model for the quarter, we kind of let that model play out based on what -- based on the inputs and loss rates and qualitative factors. And so we let that model play out. And it's -- as you know, it's a pretty healthy reserve at 1.59% and quarter-over-quarter, it stayed at 1.59%. There's some repositioning within the assets quarter-over-quarter that kind of led that to be flat in spite of the increase in criticized, we had some reposition within asset classes. But really, we let the model continue to drive the output based on loss rates, Q factors and Yes. So again -- and we'll just believe it to be a very healthy number based on where it stands today at 1.59%.

[Kevin Chapman, executive]

David, this is Kevin. I may just add to that. I think if you look at our allowance I know we're talking about this year and maybe last year. But I think it's worthwhile to go back to 2020 because that's when we really built our allowance, and we built it as a result of the pandemic and the lasting effects of the pandemic and what it did on certain asset classes. There were paradigm shifts as it relates to work environments or senior housing and how that impacted those asset classes that it took time -- we felt it would take time for those stresses to play out in the portfolio.

We weren't going to recognize real-time losses with charge-offs in the pandemic. It took time for these stresses to show up in the portfolio. And I think what we're trying to say with our allowance in methodology is the provision we provided in 2021 to build the allowance, it's playing out, right? And I may not -- we identified we had a lot of concern with a lot of different asset classes in 2021 and -- and some of those concerns have abated , some of those concerns have been confirmed.

But I think what we're seeing is in senior housing, there continues to be stress, but we provided a lot for senior housing in '20 and '21. As it's evolved, office has continued to be a persistent problem or not -- maybe not a problem, but a concern. And we're just monitoring that concern and maintaining reserves and if we need to use the reserves, we will. But I think we have a history of quick identification of problem loans, work to resolve it and minimize loss.

And that is the process that kind of underlines not only the CECL, but also just our loss recognition -- loss identification and loss recognition, which I think is the whole basis and theory behind CECL.

[David Bishop, analyst]

Got it. Appreciate that color. And then final question for me, saw the slide, a little bit of an uptick in excess liquidity, cash and liquidity given the sales think you're going to operate around that level into the merger? Or is that for funding loan growth?

[James Mabry, executive]

Dave, this is Jim. I hope it's the latter. You heard Mitch's comments about loan growth, and we'll see how that plays out. But we'd like to think that, that liquidity will -- some of that will transfer into the loan bucket? If not, then you could see us potentially -- and I think this will probably maybe happen anyway just given our deposit behavior, but you could see us purchasing some securities for the first time in quite a while, but certainly our preference is to put to work in the loan book.

[Operator]

Our next question comes from Stephen Scouten of Piper Sandler.

[Stephen Scouten, analyst]

Maybe kind of a follow-up to that line of question. Just kind of thinking about the security balances moving forward. I assume maybe similar ideology to the cash balances, a preference to put them into loans if possible. But looks like they could elevate as a percentage of the balance sheet pro forma with FBMS. So just kind of wondering how you're thinking about securities kind of into the close and on a pro forma basis as a percentage of the balance sheet?

[James Mabry, executive]

Steve, you're correct. I mean, as we sit here today, and certainly as of the June numbers, we haven't run it as of September, but that I would think it's relatively unchanged. We're going to come out with a pretty healthy liquidity position pro forma for The First. And so I don't know exactly where we'll put that liquidity. But I do like the fact that we're going to be sitting on considerable liquidity and how we put it to work, we'll see.

But again, the hope would be that we -- that a lot of that liquidity will go into the loan book. And I sort of think that's the -- at least as we think about the balance sheet, I think that's sort of the theme with the first. When we do get to closing, the balance sheet, the Renasant balance sheet is just strengthened considerably by the first and certainly by the capital raise that we completed. I mean liquidity is up considerably to your point, capital will be quite strong pro forma. And then we've got the prospect of accreting considerable capital, as you know.

So whether it's liquidity or capital, I feel like we're going to -- we'll be in a little bit of a different place as we get to the latter half of '25 and '26 than we've been in the last couple of years and that meaningful excess liquidity and meaningful capital, which to me just opens doors for other uses for those dollars that we really -- I mean they've been on the table historically, but are going to be potentially more actionable as we get in the latter part of '25 and '26.

[Stephen Scouten, analyst]

Very helpful there, Jim. Appreciate that. And then just, Mitch, I appreciate your earlier comments around loan pipeline and kind of how you're thinking about that relative to paydowns and such. I mean, with what you saw this quarter in elevated paydowns, do you think that could be a more persistent problem in the quarters ahead, just as rates continue to come down? Do you think there's a backlog of CRE paydowns potentially that we have to work through before we can actually see maybe better loan growth trends in -- at some point in '25?

[Mitchell Waycaster, executive]

So Stephen, I think, likely for the industry, for us and other banks, it would be logical that you could have CRE, I referred to them as more seasoned projects that have been on the sideline waiting to move and put that capital -- exit those projects and go into a new project, which in itself will create additional loan production. So it's somewhat like a treadmill, it speeds up. So both production will elevate some as well as pay off. So I think that's logical in future quarters. I think that you make a good point.

I don't know that, that would be over pronounced maybe would be another way to say it. I was really in my comments there, I was reflecting on our ability to broadly both geographically and in our product types to produce. But I think just in that CRE space, I think you make a good point, and that's likely to play out at our bank and probably in others as well.

[Stephen Scouten, analyst]

Yes. Yes. I think it would be an industry issue, if anything, for sure, not specific to any -- to your bank for sure. But I guess if that were to happen, I'm just curious, kind of coupling these two conversations together, increased capital and liquidity more fuel to put to work, but the potential for some larger paydowns theoretically, what could other avenues be for deployment of that liquidity? I mean do you think about loan purchases at any point? Or I don't know, new verticals or team lift out there just kind of thinking about what could be the next derivative of growth if we do have that impediment maybe to deploying that liquidity near term?

[James Mabry, executive]

Steven, this is Jim. I'll start and certainly welcome Kevin or Mitch to chime in. But I think it's some of the things you said. I mean, whether it's team lift-outs or how we think about remixing that balance sheet. Again, I think it's sort of a different position than we've been in. And we've really enjoyed a great balance sheet, a really strong balance sheet, but it just gets so much stronger. And -- so we -- obviously, the first goal here is to keep our eyes on The First and a very successful integration. And that's job one to bring over that balance sheet in those earnings and to execute that successfully.

But I think on top of that or away from that, certainly, whether it's sort of the nonbank. We've done a couple of small nonbank deals, as you know, and that's gone extremely well, really pleased with what's happened there, particularly at RBC. That's just been a really good story for us. So whether it's smaller deals or lift outs. And I think all that's open to us, and we're going to have -- as you point out, we're going to have the capacity to act on it, if those things come along.

[Kevin Chapman, executive]

Stephen, it's Kevin. I'll just chime in. I think you laid out a really good answer. Kind of to your question, is optionality that, that cash and liquidity brings, right? Everything you mentioned is on the table because we have that cash and liquidity, and it's only going to be enhanced with The First. And so -- but that kind of sums up why we've put such an emphasis on deposit growth.

Yes cash is king, liquidity is king, it's a fundamental of banking, not necessarily lending, but deposit generation is a fundamental of banking. And as an industry, maybe we took our eye off that ball for 13 years. If you look over the last year, 12, 15 months, we are keenly focused on deposit growth. And I think you've seen it in our numbers.

And we're okay if that loan-to-deposit ratio creeps down because our deposit generation is outpacing loan growth because it gives us optionality of everything you just mentioned. And that -- I think that's the position we want to be in. But let's keep options on the table and then let's evaluate what's best for us to execute on at that time. But it all starts with that optionality that the liquidity and cash bring to the equation.

[Stephen Scouten, analyst]

Yes. The optionality is definitely exciting. But appreciate the color there.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Mitch Waycaster for any closing remarks.

[Mitchell Waycaster, executive]

Well, thank you, Alan. We will next meet with investors at the Piper Sandler Conference in Florida on November 14 and thank you to each of you for joining the call today and for your interest in Renasant.

[Operator]

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