Renasant Corporation (RNST) Earnings Call Transcript & Summary

Good day, and welcome to the 2020 Annual Shareholders Meeting of Renasant Corporation. I would now like to turn the conference over to Robin McGraw, Executive Chairman of Renasant Corporation. Please go ahead.

Thank you. Good afternoon, and welcome to the 2020 Annual Shareholders Meeting of Renasant Corporation. I'm Robin McGraw, Executive Chairman, and it's my pleasure to welcome you here today. We find ourselves in an unprecedented time as each of us is taking personal responsibility to fight the pandemic that has spread rapidly across the globe. Renasant's highest priority during this time is to support the health and well-being of our shareholders, our employees, our directors and the communities in which we serve. And therefore, we elected to host our meeting virtually rather than welcome you to our headquarters in Tupelo, Mississippi. Although our format is different from past years, we still value your participation in the meeting. Validated shareholders have the opportunity to ask questions of our executive leadership team by submitting them through the designated field on the web portal. If there are any questions about the proposals to be voted on at this meeting, we will answer those questions before the polls close for the voting. There will be a Q&A session at the end of the meeting, during which we will respond to any other questions that anyone may have. Before submitting any questions, please review the rules of conduct that are posted in the virtual meeting web portal. The rules address appropriate content and link to questions, the number of questions each shareholder can ask and other matters. With respect to voting, shareholders who have sent in proxies or voted via telephone or Internet and do not want to change their vote, do not need to take any further action. However, if you haven't voted or if you wish to change your vote, you may do so by clicking on the voting button on the web portal and following the instructions there. Now let's turn to the business of the annual meeting. The Board of Directors fixed February 21, 2020, as the record date for determining shareholders entitled to vote at this meeting. An affidavit has been delivered attesting to the fact that either a notice of the Internet availability of the notice of the meeting, the proxy statement and the 2019 annual report to shareholders or documents themselves were mailed on or about March 19, 2020, to all shareholders of record as of that date. These documents are incorporated into the minutes of this meeting. Director John Creekmore has been elected the Chairman of our Proxy Committee. Mr. Creekmore will now present the number of eligible shares that have been voted either in person or in proxy. Mr. Creekmore?

Thank you, Robin. There are 57,502,825 shares eligible to vote. 48,165,455.89 shares or 83.76% of the shares outstanding voted either in person or by proxy prior to the commencement of this meeting. Since this represents more than a majority of the voting power of all issued and outstanding stock entitled to vote as of the record date, a quorum is present for conducting business.

Thank you, John. Now our Corporate Secretary, Mark Jeanfreau is prepared to read the minutes of the 2019 Annual Meeting of Shareholders, unless the reading of the minutes is waived. Is there a motion to waive the reading of these minutes?

So moved by Neal Holland.

Second by John Creekmore.

Thank you. Now is there a motion to adopt the minutes of the 2019 Annual Meeting of Shareholders?

So moved by Neal Holland.

Second by John Creekmore.

Thank you. At this time, I will present the matters submitted for shareholder vote. Please submit any questions or comments on the proposals through the designated field on the web portal. We will respond after presenting all the proposals. Please also remember that you do not have to do anything if you've already voted your shares. But if you have not yet voted or if you wish to change your vote, you may do so now by clicking on the voting button on the web portal and following the instructions there. [Voting]

We will close polls following the presentation of the proposals and addressing any questions submitted related to the proposals. The first proposal is the election of 5 Class 3 directors. The nominees for Class 3 directors for the 3-year term expiring in 2023 are: Gary D. Butler; Marshall H. Dickerson; R. Rick Hart; Richard L. Heyer Jr.; and Michael D. Shmerling. The second proposal is the approval of the Renasant Corporation 2020 long-term incentive compensation plan. The third proposal is the advisory vote on the executive compensation. And finally, the fourth proposal is the ratification of the appointment of HORNE LLP as the independent registered public accountants for 2020. Since there are no questions or comments, we're going to move forward, and everybody has now had the opportunity to vote. I now declare the polls for the 2020 Renasant Corporation Annual Meeting of Shareholders closed. And I turn to Mr. Creekmore, do we have any preliminary -- do you have the preliminary voting results?

Yes, Mr. Chairman. Based on the preliminary voting totals, all directors nominated for election received the required plurality of votes cast and each of the remaining proposals as described in the proxy statement received a majority of votes cast.

Thank you, Mr. Creekmore. We will report our final voting results on Form 8-K filed with the SEC not more than 4 business days following this meeting. We would now like to take the opportunity to recognize our external audit firm, HORNE LLP. Rusty Butcher, the lead partner of our audit, is participating in the meeting today. If you have any questions for him, please submit those questions now, and he'll be available to answer those questions at the end of the meeting. Now I'll turn the meeting over to our President and Chief Executive Officer, Mitch Waycaster, to present our annual report. Mitch?

Thank you, Robin. And as Robin mentioned earlier, thank each of you for joining us in a virtual environment as we navigate through this unprecedented time, but a time when our company through our dedicated group of financial professionals, our employees, our greatest asset, are serving well our clients, communities and you, our shareholders. You will see on the screen a forward-looking statement. I'll begin by calling your attention to that disclosure and remind you that forward-looking statements in this presentation are not guarantees of future performance. They involve risks, uncertainties and assumptions, and actual results may differ. We'll begin with a review of the year 2019, just some highlights. I've requested Kevin Chapman, our Chief Operating and Chief Financial Officer, to join me in this report. But beginning with the highlights of 2019, you'll see those there on your screen. 2019 was a year of record net income. It was a year that required adjustments in our plan as the Federal Reserve reduced the federal funds rate on 3 separate occasions. During '19, we increased our annual dividend raising it from $0.84 per share to $0.88 per share, an almost 5% increase from the prior year. In addition, as we continue to prudently manage our capital structure to provide value to our shareholders, we completed previously announced $50 million in stock repurchase program and commenced another $50 million stock repurchase program in October. Approximately $63 million was repurchased in 2019. In 2019, we were opportunistic in making strategic hires. We saw that opportunity as a result of disruption in markets across our footprint due to M&A activity, our management restructures. And as we were positioning our company for continued growth, we did make significant investments. And certainly, 2 of those areas, a very important area was in the corporate and commercial banking groups. I'll expand more on that in just a moment. Continuing those investments last year, as we look to the future, we were able to enhance our mortgage capabilities with the acquisition of a wholesale mortgage operation team, which was very complementary to our existing wholesale operations. Over our 116-year history, our company and our employees have invested greatly in our communities. And 2019 certainly was not an exception. Our associates logged more than 3,600 community engagements. I will go into that in a little more detail later as well. Those were just a few highlights of a very successful year. Now let's look at our footprint. As we look across the footprint, we see more than 200 banking, lending, wealth management and insurance offices. And if you include mortgage, you can take that to the Carolinas, we'll talk about that a little more in a moment on another slide. But the first bullet point there placed -- place emphasis here is the fact that we are widening our scope of product, service, and we'll talk some about geography. But we're building on a 116-year-old strong foundation on a strong vision, mission and core values building out our community bank, our commercial corporate bank, our commercial business lines, our mortgage company, our wealth company, inclusive of insurance. That certainly includes our digital capabilities and our investment in technology, also growing the total spectrum of our operational support as well as risk management as we grow prudently. Next bullet point talks about scale and density, particularly in economic hubs within our footprint. We remain opportunistic. I mentioned that earlier, and I mentioned talent acquisition. Also de novo into new markets and expanding existing markets, M&A strategic partners, all of these things are contributing to building out scale and density. We are geographically diverse. If you look at those maps, you see large markets like Atlanta, Birmingham and Nashville and Memphis. You see, I would say, the next tier markets, places like Knoxville, Tennessee; Huntsville, Alabama; Jackson, Mississippi; Mobile, Alabama; Pensacola, Florida, new market; Macon, Georgia; Albany, Georgia; Ocala, Florida, inclusive of the Orlando Metro Area where we have a lending office. And as well, I would mention our SEC markets, Oxford, Mississippi; Starkville; Tuscaloosa, Alabama; Auburn; Knoxville, I mentioned earlier; Gainesville; and Nashville. The other thing you see across that footprint are smaller markets, small community bank markets, all of these markets bringing value that make up the fabric of Renasant bank. So we are very geographically diverse. We have a very healthy franchise. We have a very healthy marketplace as we operate in the Southeast United States, an area of this country where the population is growing. Employers are positioned for growth. We're going to talk about the pandemic at the end of the presentation. But I think particularly as we're positioned to come out of this time in our history, the position that we have in the southeastern part of the United States is going to put us in a very good position. But certainly, it's in an operating environment, unlike many other parts of our country. That's very advantageous to doing business. So a very attractive footprint. As we look at the next slide, I want to place emphasis on our commitment to diversity and inclusion and just, again, investing in our communities where we do business. At our company, at Renasant, we are committed to fostering, cultivating and preserving a culture of diversity and inclusion. That's true for all of our almost 2,600 team members across our 7 states and 200-plus locations. If you look at the top left of that slide, it denotes those 3,674 engagements, I mentioned that earlier. Those are individually-led initiatives that occurred in 2019. Just below that, you see a depiction of youth at Renasant Financial Literacy Games. More than 10,000 students attended that event. Just below that, you see Tracey Morant Adams, who, at the executive level of our company, leads our program, our diversity, inclusion, community development, economic development across our footprint. And there, she leads, again, a session with students talking about smart money decisions. To the top right, you see Renasant Roots, a program that we developed that focuses on small business and entrepreneurial success across all of our markets. And then at the lower right, you see home ownership programs, led through our mortgage division through our various community banks across 5 states, but focusing on educating individuals and preparing them for home ownership. I could mention other programs that you don't see here like Rise with Renasant and The Nest that focuses on female leadership development, another significant focus in our company. Now Kevin and I will walk through our 4 strategic initiatives. I'll begin with capitalizing on opportunities. I've mentioned that already in our hiring, and I'll mention that again as I walk through this section. But we remain focused on being opportunistic as we evaluate strategic partnerships, focusing on highly accretive acquisition opportunities. Eight of those have been completed in the last 10 years, 7 banks, 1 wealth company. We continue to leverage our existing markets as well as seeking new markets. Some of the recent examples this past year of both of those, I'll start with new markets, most recently in Fairhope, Alabama; Pensacola, Florida. And then expanding to nearby markets or expanding in markets we are today in Mobile, Alabama, a recent expansion there. It's true of Huntsville, Alabama; Florence, Alabama with a lending office that's adjacent to some of our offices in that Quad Cities area and Northwest Alabama. Knoxville, Tennessee, a very important market to us, and we just opened a new office there. As Franklin, Tennessee, the growing metropolitan area of Nashville, in that very important segment south of the city there in Franklin. Another area, a very strong market that we recently expanded would be Macon, Georgia. And staying in that state as well in Savannah with a lending office. So you can see we're very focused on capitalizing opportunities by leveraging existing and seeking new. I would also add to that new lines of business. As we grow our core bank, as we grow our commercial and corporate bank over the last several years, we have been successful in identifying new disciplines in commercial and corporate banking. And we continue to build those out as we go forward, building on that strong foundation that we have in place as a core bank. Looking at the next slide, and I'm going to go back to talent acquisition that I had mentioned earlier, to give in a little more detail. Looking at that slide, you see a map, but let's start with the bullet points to the right. We added just under 50 revenue producers or relationship managers across this 5-state footprint that included continuing to build out our corporate banking team. A significant addition there was Curtis Perry. Curtis joined our company as Chief Corporate Banking Officer back in May of '19, a 30-plus-year veteran banking in the Southeast. Curtis is doing tremendous job continuing to lead our effort to build out a corporate bank. The next line or the next bullet there references increasing our credit team. We have an outstanding credit team in this company. But as we grow, particularly our corporate initiatives, we are very intentional, and we will remain very intentional to maintain prudence and focus on credit quality. And naturally, as we develop new relationships, particularly in the corporate realm, very important that we acquire that talent that's familiar with those markets, with those products and, in many times, familiar with the bankers and their clients that have joined us, and we were very successful in '19 continuing to add to already strong credit team. Another important area that we continue to build out is our treasury solutions. And as we grow as a bank in community, in business, in commercial, in corporate, in our business lines, many of the treasury solution needs that we see are somewhat different. So we have to have professionals that can focus on those product offerings and also understand and meet the needs of those clients. And naturally, that is a revenue opportunity for us. So that's another area we've been very successful in '19 continuing to build out. If you look at the map, we'll do this quickly, I'm not going to go to every one of those markets. But I mentioned corporate banking and commercial banking that Curtis leads. Also the markets that are led by Scott Cochran in our core and community bank, we have been very successful in adding talent. And we -- this is just an example of that success. And on this map, we made several stops there, and you will see depicted just starting in Nashville. You can see the different disciplines and specialties, the talent that's been added. And these individuals cover a region. So it's not necessarily specific to that location, but you see those talents in Nashville, you see in Memphis, the middle market, the C&I, much of our emphasis there. In Birmingham, the strong commercial real estate teams, equipment leasing and finance, the Head of Retail Banking, other commercial REMs, coming down to the Gulf. And you see depicted there, Mobile, Pensacola, Destin, we continue to expand, adding new market presence and commercial lenders and business bankers. Curtis is located there in Columbus, Georgia. I mentioned Curtis earlier. And then back to the important markets of Atlanta, where we are a significant player in the Atlanta Metro Area. I know Bartow Morgan is on the call with us this morning, serving as a Board Member. Bartow also serves as Chairman of Georgia and very influential as we continue to build out the market in Atlanta. And I will say this, too. In '19, as we continued to grow the corporate, the commercial bank, the treasury solutions, Bartow has been very instrumental in that development and growth. So before we leave that slide, all to say and while we're on being opportunistic to capitalize on opportunities, just saying again that those things include strategic partners, M&A, leveraging existing and new markets. It includes new lines of business, and it certainly, as you can see here, included talent acquisition in 2019. And with that, we will go to the next slide and bring us back to our next strategic initiative, enhancing profitability, and I'll turn it over to Kevin.

Thank you, Mitch, and good afternoon to everyone. And thank you for joining us this afternoon for our shareholders' meeting. As we go through the financials, we're going to walk back to 2019. And although 2019 may have ended 4 months ago, it feels like it may have ended 4 years ago with everything that's changed since the end of the year. But our perspective and our conversations is going to be around what happened in 2019. And looking at core earnings, Mitch mentioned that we had record earnings for the year. Our record net income was $169 million, up from $158 million from the prior year. Our EPS did decline $0.09 to $2.91 from $3. And looking at 2019, it was not only a period of transition for Renasant, but it also appeared a transition from an interest rate environment. We walked out of 2018 with the Fed increasing rates in the fourth quarter of '18 to start to see pressure on long-term rates early on in 2019, which ultimately led to the Fed reducing rates 3 times in 2019. That had an impact on our earnings. We reacted quickly to try to mitigate any interest rate risk, not only in the short run, but also in the long run. As Mitch mentioned, throughout 2019, we invested in our future with the hiring that we had done. We were willing to reduce short-term earnings and short-term EPS to make investments in individuals that will provide long-term growth opportunities. In the past, we've been very opportunistic as it relates to new hires or M&A or business line acquisition. Throughout 2019, in the banking market, we saw M&A activity increase significantly. Renasant did not announce an acquisition. But throughout our footprint, over 70% of our markets had a transformational acquisition going on in that market, which caused a significant amount of disruption. And as a result, talent was displaced. And Renasant was very aggressive in hiring that talent that was displaced, as Mitch noted. Going forward, we'll still continue to be opportunistic in our hiring as those opportunities present. Looking at our returns and our performance. Returns on tangible assets, returns on tangible equity, all remain in upper quartile compared to our peers. As you can see, in 2019, we did have a decrease in both. 2019, as I mentioned, was a year of transition. It was also a year of transition as far as asset size. We ended the year at a little over $13 billion in assets. And with the -- 2019 was the first year that we became subject to the Durbin Amendment, a part of the Dodd-Frank Act, and that reduced our pretax net income $6 million in 2019. But that was implemented on July 1, 2019. That line item contributed significantly to the decrease in our return on tangible assets and our return on tangible equity. Looking at our total assets. As I mentioned, we ended the year at $13.4 billion, and although we'll talk about the loan growth that occurred, I think it's important to talk first about how we fund growth because the quality of a banking franchise is not dependent on its ability to grow loans, but it's on -- on its ability to attract and retain core deposits. Renasant is a core funded bank. We have a 90% loan-to-deposit ratio, and we have virtually no wholesale borrowings, broker deposits or anything that would qualify as a noncore deposit. We are predominantly core deposits funded. 2019, we grew noninterest-bearing deposits $230 billion. And noninterest-bearing deposits at the end of 2019 represented 25% of our total funding. Those are some of the highest levels of noninterest-bearing DDA growth or the composition and contribution of noninterest-bearing deposits that the company has ever experienced. Specifically, on the growth of $230 billion, that was all generated organically. Million -- I'm sorry, $230 million. That was all generated organically. In times where we have acquired banks, we have not grown deposits at that level. Looking at the loan portfolio, as Mitch mentioned, we saw significant growth in the loan portfolio, growing approximately $500 million. Net growth ended up being 7% for the year, with most of that growth occurring in September, October, November and December. We had a relatively flat balance sheet for the first 8 months of the year. But the majority of that loan growth occurred in the back half of the year. And as I mentioned, that growth came from the markets we operate in as well as some of the enhancements that were made from the hiring that we had done during the year. The next 2 initiatives I'll talk about really focus on the defensive posture and the safety and the soundness of Renasant. We're going to talk about our risk management, which really comes down to our credit risk as well as our capital, both of which are more defensive pillars as we look at our strategic plan. And looking at our credit quality, our credit quality at the end of the year, we're at some of the lowest levels the company has ever experienced. And this is -- these are levels lower than what we experienced leading into the recession of '08, '09. So we have some of the best credit quality metrics that the company has ever experienced. Nonperforming assets to total assets ended the year at 33 basis points, up slightly from 2018 of 29 basis points. Our net charge-offs for 2019 were only 4 basis points for the year. As Mitch mentioned, with the hiring that we had done, we had hired over 50 revenue producers, I would like to highlight and remind that during that period, we also hired 3 senior credit officers to help ensure that from a risk management standpoint that we had experience from an underwriting perspective to wrap around these new business lines or these new hires that we had made. At the same time, we have a legacy of proactively managing our credit risk. We are not significantly concentrated in any one asset class and our commercial real estate concentrations are well below the regulatory guidelines of 100% and 300%. Last of all, looking at our capital ratios. Our capital ratios continue to remain above well-capitalized requirements. We ended the year with a leverage ratio of 10.3% and a total risk-based capital ratio of 13.8%. And not only well above well-capitalized requirements, but they're also significantly above our own internal benchmarks, which are above the well-capitalized requirements. Our capital and our capital generation, the returns that we have, are sufficient to provide for the organic growth that we anticipate for our dividends and where we see the opportunity to do so to deploy it opportunistically. As Mitch mentioned, we did increase our dividend in 2019. For 2019, the annual pay rate was $0.87. On an annualized basis, it is $0.88. As we look ahead into the future, with what's happened in Q1, there will be questions about what's the sustainability of the dividend. As we look at our dividends, our capital management plan, we look to have a dividend payout that is sufficient to ensure that we retain capital to support the balance sheet, any losses that are there, any growth or any ways to deploy that externally or opportunistically. When we look at increasing a dividend, we want our dividend payout ratio to be in the 30% to 35% range. So as we look to the future, those are going to be our guidelines, is that if we remain in the 30% to 35% range, that there may be the opportunity to increase the dividend. If not, we will make every effort to maintain the dividend in what may be a volatile period that we're walking into that has begun at the end of Q1. And so with that, Mitch, I'll turn it over to you for any comments.

Thank you, Kevin. And as you think about those 4 key strategic initiatives; capitalizing on opportunities, enhancing profitability, focusing on risk management and building capital ratios, it brings us to the summary and looking forward and specifically to 2020, and I'll end with some comments about the pandemic. So let's start just looking to the future. And it really can be summarized in these 6 points, and I'll go through this quickly, just maybe help us get our arms around what we just talked about. And I'm going to start with widening the scope. I mentioned it earlier, but that includes market expansion. It includes business lines growth. It includes product development and digital adoption. It includes talent development, not just talent acquisition, but talent and development. We have outstanding talent within this company. All of those things make up and drive, widening the scope. When we say aligning the support, we have grown as a company, we continue to grow, and we have to simply make sure that everyone in the company is working as a team and that we're aligned, that operationally, administratively, from a risk standpoint, we're all together in one team and as we call it to market as one bank. Accelerating the pace is about technology. We have invested heavily in technology to drive our digital delivery. And boy, is it ever showing up right now in the market and the environment that we're operating in, in the pandemic. But certainly, to our client and understanding what their needs and what they want, what they need to make their daily life better, certainly accelerates the pace as we make that investment and that digital delivery is adopted. And all of those things through efficiency, through efficiency initiatives, through driving revenue that creates profitability. Second bullet is opportunistic and strategic partners. I mentioned earlier 8 M&A transactions within 10 years, 7 of those banks, 1 wealth company. We will continue to have those conversations. We continue to look for those opportunities and will in the future, beginning to make sure that we're culturally aligned, that our business models are aligned, that the profitability metrics that we're very disciplined around that we're meeting those and at the end of the day, that we're truly long-term partners. We see the world the same, and we're simply better together as we go forward. Another important, we see this continuing to be an opportunity, is strategic hires, individuals that are aligned culturally, that enjoy the same risk appetite and that truly understand our business model and want to be a part of that model. And that's where we've had success in recent times and over the years. And then organic growth. Organic growth that is relationship driven, that is profitable, and that is what Kevin mentioned it earlier about deposits. That is what builds a true banking franchise. And on that, we're very focused. The next bullet, disciplined and balance sheet growth and mix. Kevin just talked about risk management and our focus there. We're disciplined in that. Things are relationship driven. And -- but at the same time, very disciplined to make sure that we have credit partners that are aligned. So disciplined in the balance sheet growth and that we're aligned there in our risk appetite and that we're diversifying our portfolio, particularly as we develop the core, the business, the commercial and the corporate bank. We are a financial services company. We seek to be the total service provider, developing long-term profitable relationships. And a major part of that is this next bullet. It's mortgage. It's homeownership. And our dedication to having product and service that meets the vast array of mortgage needs across our footprint. That is equally true of wealth and insurance. But having product and service that goes well beyond your traditional deposit product, and these are 2 areas that we continue to expand across our footprint and are very important in our future. Another area I referred to already and that's being laser-focused on understanding clients' needs and being able to respond to those needs in a digital environment. It's investing in technology, it's partnering with the best providers, if it's something that we cannot develop internally. It's building those partnerships. And as we do that, it's a continual process of revamping our digital experience and particularly, of late, our new online account opening and our new website. And again, in the environment that we find ourselves in today, very important that we have made those investments and that we're able to deliver that product and service today. And the last and probably the most important and what we are -- we have a high focus on at Renasant is enhancing our client experience. And we believe every day either add to that or take away from it. At our company, we like to say you're either serving the client or you're serving someone who serves the client, and there's nothing more important. We have an internal program called Renasant X. And it's our internal program that we all collectively focus on this client experience and the improvement of that experience. And we monitor it, and we ask our client how are we doing, and we take that and we make adjustments. As I transition to COVID-19, and -- the client experience is a good segue to this topic. I don't know that I've ever seen in my 41 years with this company that client experience has been any more evident than during this time. It has simply been outstanding. The team effort, how people are coming together in a selfless way to make sure that we're understanding the clients' need and we're tirelessly working to meet that. But to give you a summary, as we contemplated what we might be entering into, in February, we were evaluating the situation and we're developing a plan. We activated -- Mary John Witt, our Chief Risk Officer, led this effort. We activated the Pandemic Planning Committee in early March to put in place plans that align with CDC guidelines. We did do that early. That has paid all for us. We provided special benefit assistance to employees, our greatest asset, that have been impacted by the pandemic, whether that's personal -- through personal exposure, family illness, school closures or disruption in child care. Through our investment in technology, we've empowered employees to work from home where that was possible. We have -- and I believe this was back on March 20, we restricted access to branches and no way did we close business, we've continued to do business, but we've operated in very prudent ways, including branch cleaning, closure protocols have been implemented, the things that minimize potential customer and employee exposure, keeping our customers' health in mind, using our drive-throughs in a greater way. I will say this. Because of these early -- this early planning, we've been very blessed as a company relative to the level of people that had direct impact to-date of COVID-19. And certainly, our thoughts and prayers are with those who have, but our early preparedness has certainly paid off. Another thing that we focused on early, and we were very proactive as we focused on our clients most impacted, were loan deferral programs. We established those for qualified consumer and commercial clients to defer interest and principal payments up to 90 days. Another program, and it goes on, as we speak. As a matter of fact, the second phase actually began yesterday. We were very proactive in developing quickly a program where we participated in the SBA's Paycheck Protection Program. In the first 13 days -- or in the 13 days of Phase 1, we originated just over $1 billion in loans for over 4,400 small business clients. And to put that in perspective, that is about 6 months' worth of loan production that was created in 13 days, is phenomenal that our team put that together, successfully delivered that, and it's made a tremendous difference for those businesses. And of course, that's been repeated across this country. And that was Renasant's part and carrying out that program in our markets. And as you're aware, Phase 2 is going on as we speak, and we're fully involved there as well. Another thing is our communities. We've made targeted and intentional efforts to support the needs of our communities, whether it be food banks, meals for children, the elderly, medical supplies and that's just to name a few. We've been very, very active. In closing and just wrapping up those thoughts and the report, again, I would say our team's response in the pandemic to support each other and to work as a team to serve our customers, our communities and ultimately, our shareholders, has been and continues to be outstanding during this health care pandemic. And just reflecting on this time, as we continue to build bridges and develop solutions for our clients, that takes us over and through the health pandemic. And as we plan for our future and contemplate a new normal, we can be secure in the knowledge that our core values that have guided this institution for 116 years through other challenges, if you look back through the history of the company, those core values, those things, that foundation, that doesn't change. Our focus on seeking to understand the needs of our customers and providing solutions that exceed expectations no matter the economic environment will not change. So we will continue to seek to be the financial services provider of choice in each community that we serve. Mr. Chairman, that concludes our report. And with that, I will ask for a motion that we approve the report.

This is John Creekmore, and I so move.

This is Tom Foy, and I will second.

Thank you. I want to thank Mitch and Kevin and the rest of the leadership team for all the hard work that they've done and leadership that they've exhibited during 2019, and especially for the proactive leadership that I've seen exerted during the COVID-19 pandemic. So again, thanks to both of you and the rest of the leadership team and all of our associates across the system for the work that has been done.

With that in mind, as we look for questions, we do at this point -- I see 1 question. And that question, I will refer to, and there's a possible second question, I believe. I'll throw the first question back to Kevin Chapman based on some comments that he made during his presentation. Kevin, as you know, is our Chief Operating and Chief Financial Officer for the company. So Kevin, the question is, what is our dividend policy and outlook?

Sure. Thank you, Robin. So as we look ahead, I will just remind you that there's probably a lot of uncertainty. There's less that we know about the future that we know today and it's changing rapidly. So as I answer the question, I will throw that caveat in there. But just to rephrase or remind you as to what we mentioned about our dividend policy is that, we, as a management team, and I think speaking on behalf of the Board, our dividend is one of our pillars of the Renasant story. Walking back to '08, '09, we did not decrease our dividend. We did not cut our dividend in '08, '09. And it all had to do with our capital plan and how we proactively got ahead of our issues and managed through that process. As we walk into whatever uncertainty we're walking into as it relates to COVID, I can tell you we have a stronger balance sheet. We have a stronger capital position. The extent of any changes in the balance sheet or deterioration, that will be determined. But our history has been prudent credit underwriting as well as a proactive capital plan to ensure that we can not only have capital to absorb losses, but capital to maintain our dividend. As I mentioned, we target a dividend payout ratio of 30% to 35% before we increase the dividend. That doesn't mean that if it's below that, we'll decrease it. It just means that if we fall below that for a period of time, that we may not be increasing the dividend at the same pace that we had when the dividend payout ratio was in that 30% to 35% range. But as I mentioned, there's a lot of uncertainty, and our goal and one of the pillars of the Renasant story is that dividend, and it will be -- management will work tirelessly to ensure that, that dividend is maintained. I would also say that from a comparison to '08, '09, we were a community bank in '08, '09. Now we're over $10 billion, and viewed differently by the regulators. We don't anticipate the rules to be different. But there will be more robust regulatory oversight than they were when we were a $3 billion bank 10 years ago. So Robin?

Thank you, Kevin, for that answer. And the next question we have, and I'll refer this to Mitch Waycaster, is, what fee does Renasant receive for PPP loans?

Sure. Robin, thank you, and let me give you a little background before I answer that question. I mentioned earlier, we had the opportunity to originate about 4,500 loans, totaling about $1 billion. But specifically, relative to this question, the Small Business Administration when they defined this program were very specific that the client would not pay any fee and the bank cannot charge any fee. So to compensate a lender for participation in the program, that fee aggregates up. For the smallest loan in the program, up to $350,000, the fee is 5%. For $350,000 up to $2 million is 3% and then over $2 million, the fee that is paid by SBA, the government, to the bank, not by the client, is 1%. So to answer the question, it varies, depending on the size and the level of funding over time. Another thing that I think is important to consider that comes out of this fee that's payable to the bank is an agent fee. So if there was an agent, an attorney, an accountant involved in the transaction, that's identified at closing, working with the bank. And that fee that's actually paid to that agent is -- that also comes out of the fee the bank receives. So the fees even that I just reviewed are not 100% to the bank. That could be reduced if there is a payment to an agent.

Thank you, Mitch. Are there any further questions? There don't appear to be any further questions. So if there's no further business to discuss at the annual meeting, it appears that, that being the case, do we have a motion to adjourn the meeting?

This is Neal Holland, I so move.

Have a motion. Do I hear a second?

This is Tom Foy, I will second.

I have a motion and a second. I do declare this meeting as adjourned. Thank you, everyone, for joining us.

The conference has ended. You may disconnect your line.