Company Quick10K Filing
Quick10K
Renasant
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$36.36 59 $2,130
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-06 Regulation FD, Exhibits
8-K 2019-04-23 Shareholder Vote
8-K 2019-04-23 Earnings, Exhibits
8-K 2019-02-14 Regulation FD, Exhibits
8-K 2019-01-22 Earnings, Exhibits
8-K 2018-10-24 Other Events, Exhibits
8-K 2018-10-22 Earnings, Exhibits
8-K 2018-10-16 Officers, Exhibits
8-K 2018-09-01 M&A, Off-BS Arrangement, Officers, Exhibits
8-K 2018-08-06 Other Events, Exhibits
8-K 2018-07-31 Regulation FD, Exhibits
8-K 2018-07-17 Earnings, Exhibits
8-K 2018-07-17 Amend Bylaw, Exhibits
8-K 2018-07-01 Officers
8-K 2018-05-16 Officers, Exhibits
8-K 2018-05-07 Regulation FD, Exhibits
8-K 2018-04-24 Officers, Shareholder Vote
8-K 2018-03-28 Enter Agreement, Other Events, Exhibits
8-K 2018-02-07 Regulation FD, Exhibits
8-K 2018-01-16 Earnings, Exhibits
CHTR Charter Communications 83,630
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TPR Tapestry 9,670
HCM Hutchison China Meditech 3,410
GEO GEO Group 2,490
ALX Alexanders 1,960
CDNA Caredx 1,390
BHB Bar Harbor Bankshares 422
MEIP MEI Pharma 208
MONO Monopar Therapeutics 0
RNST 2019-03-31
Part I. Financial Information
Item 1. Financial Statements
Note 1 - Summary of Significant Accounting Policies
Note 2 - Mergers and Acquisitions
Note 3 - Securities
Note 4 - Non Purchased Loans
Note 5 - Purchased Loans
Note 6 - Allowance for Loan Losses
Note 7 - Other Real Estate Owned
Note 8 - Goodwill and Other Intangible Assets
Note 9 - Mortgage Servicing Rights
Note 10 - Employee Benefit and Deferred Compensation Plans
Note 11 - Derivative Instruments
Note 12 - Income Taxes
Note 13 - Investments in Qualified Affordable Housing Projects
Note 14 - Fair Value Measurements
Note 15 - Other Comprehensive Income (Loss)
Note 16 - Net Income per Common Share
Note 17 - Regulatory Matters
Note 18 - Segment Reporting
Note 19 - Leases
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 rnst3312019ex311.htm
EX-31.2 rnst3312019ex312.htm
EX-32.1 rnst3312019ex321.htm
EX-32.2 rnst3312019ex322.htm

Renasant Earnings 2019-03-31

RNST 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 rnst10q3312019.htm 10-Q Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________________________________________
FORM 10-Q
 ________________________________________________________
(Mark One)
ý
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2019
Or
o
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     
Commission file number: 001-13253
 ________________________________________________________
RENASANT CORPORATION
(Exact name of registrant as specified in its charter)
 ________________________________________________________
Mississippi
 
64-0676974
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
 
 
209 Troy Street, Tupelo, Mississippi
 
38804-4827
(Address of principal executive offices)
 
(Zip Code)
(662) 680-1001
(Registrant’s telephone number, including area code)
 ________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý
Accelerated filer
o
 
 
 
 
Non-accelerated filer
o 
Smaller reporting company
o
 
 
 
 
Emerging growth company
o
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  ý
Securities registered pursuant to Section 12(b) of the Act:



Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, $5.00 par value per share
RNST
The NASDAQ Stock Market LLC
As of April 30, 2019, 58,628,340 shares of the registrant’s common stock, $5.00 par value per share, were outstanding.



Renasant Corporation and Subsidiaries
Form 10-Q
For the Quarterly Period Ended March 31, 2019
CONTENTS
 





PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

Renasant Corporation and Subsidiaries
Consolidated Balance Sheets

(In Thousands, Except Share Data)
 
(Unaudited)
 
 
 
March 31,
2019
 
December 31, 2018
Assets
 
 
 
Cash and due from banks
$
208,740

 
$
198,515

Interest-bearing balances with banks
353,326

 
370,596

Cash and cash equivalents
562,066

 
569,111

Securities available for sale, at fair value
1,255,353

 
1,250,777

Loans held for sale ($195,807 and $219,848 carried at fair value at March 31, 2019 and December 31, 2018, respectively)
318,563

 
411,427

Loans, net of unearned income:
 
 
 
Non purchased loans and leases
6,565,599

 
6,389,712

Purchased loans
2,522,694

 
2,693,417

Total loans, net of unearned income
9,088,293

 
9,083,129

Allowance for loan losses
(49,835
)
 
(49,026
)
Loans, net
9,038,458

 
9,034,103

Premises and equipment, net
267,447

 
209,168

Other real estate owned:
 
 
 
Non purchased
4,223

 
4,853

Purchased
5,932

 
6,187

Total other real estate owned, net
10,155

 
11,040

Goodwill
932,971

 
932,928

Other intangible assets, net
42,755

 
44,865

Bank-owned life insurance
221,973

 
220,608

Mortgage servicing rights
48,973

 
48,230

Other assets
163,681

 
202,621

Total assets
$
12,862,395

 
$
12,934,878

Liabilities and shareholders’ equity
 
 
 
Liabilities
 
 
 
Deposits
 
 
 
Noninterest-bearing
$
2,366,223

 
$
2,318,706

Interest-bearing
7,902,689

 
7,809,851

Total deposits
10,268,912

 
10,128,557

Short-term borrowings
87,590

 
387,706

Long-term debt
263,269

 
263,618

Other liabilities
153,747

 
111,084

Total liabilities
10,773,518

 
10,890,965

Shareholders’ equity
 
 
 
Preferred stock, $.01 par value – 5,000,000 shares authorized; no shares issued and outstanding

 

Common stock, $5.00 par value – 150,000,000 shares authorized; 59,296,725 shares issued; 58,633,630 and 58,546,480 shares outstanding, respectively
296,483

 
296,483

Treasury stock, at cost – 663,095 and 750,245 shares, respectively
(21,590
)
 
(24,245
)
Additional paid-in capital
1,288,106

 
1,288,911

Retained earnings
533,328

 
500,660

Accumulated other comprehensive loss, net of taxes
(7,450
)
 
(17,896
)
Total shareholders’ equity
2,088,877

 
2,043,913

Total liabilities and shareholders’ equity
$
12,862,395

 
$
12,934,878

See Notes to Consolidated Financial Statements.    

1


Renasant Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In Thousands, Except Share Data)
 
Three Months Ended
 
March 31,
 
2019
 
2018
Interest income
 
 
 
Loans
$
126,302

 
$
94,118

Securities
 
 
 
Taxable
7,925

 
3,994

Tax-exempt
1,409

 
1,685

Other
1,458

 
583

Total interest income
137,094

 
100,380

Interest expense
 
 
 
Deposits
19,772

 
8,059

Borrowings
4,175

 
3,081

Total interest expense
23,947

 
11,140

Net interest income
113,147

 
89,240

Provision for loan losses
1,500

 
1,750

Net interest income after provision for loan losses
111,647

 
87,490

Noninterest income
 
 
 
Service charges on deposit accounts
9,102

 
8,473

Fees and commissions
6,471

 
5,685

Insurance commissions
2,116

 
2,005

Wealth management revenue
3,324

 
3,262

Mortgage banking income
10,401

 
10,960

Net gain on sales of securities
13

 

BOLI income
1,407

 
945

Other
3,051

 
2,623

Total noninterest income
35,885

 
33,953

Noninterest expense
 
 
 
Salaries and employee benefits
57,350

 
48,784

Data processing
4,906

 
4,244

Net occupancy and equipment
11,835

 
9,822

Other real estate owned
1,004

 
657

Professional fees
2,454

 
2,138

Advertising and public relations
2,866

 
2,203

Intangible amortization
2,110

 
1,651

Communications
1,895

 
1,969

Merger and conversion related expenses

 
900

Other
4,412

 
5,576

Total noninterest expense
88,832

 
77,944

Income before income taxes
58,700

 
43,499

Income taxes
13,590

 
9,673

Net income
$
45,110

 
$
33,826

Basic earnings per share
$
0.77

 
$
0.69

Diluted earnings per share
$
0.77

 
$
0.68

Cash dividends per common share
$
0.21

 
$
0.19

See Notes to Consolidated Financial Statements.

2


Renasant Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
(In Thousands)
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
 
Net income
$
45,110

 
$
33,826

 
Other comprehensive income (loss), net of tax:
 
 
 
 
Securities available for sale:
 
 
 
 
Unrealized holding gains (losses) on securities
11,317

 
(7,909
)
 
Reclassification adjustment for gains realized in net income
(10
)
 

 
Total securities
11,307

 
(7,909
)
 
Derivative instruments:
 
 
 
 
Unrealized holding (losses) gains on derivative instruments
(915
)
 
858

 
Total derivative instruments
(915
)
 
858

 
Defined benefit pension and post-retirement benefit plans:
 
 
 
 
Amortization of net actuarial loss recognized in net periodic pension cost
54

 
66

 
Total defined benefit pension and post-retirement benefit plans
54

 
66

 
Other comprehensive income (loss), net of tax
10,446

 
(6,985
)
 
Comprehensive income
$
55,556

 
$
26,841

 

See Notes to Consolidated Financial Statements.

3


Renasant Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity

(In Thousands, Except Share Data)

 
Common Stock
 
Treasury Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Total
 
Shares
 
Amount
 
 
 
 
 
Balance at January 1, 2019
58,546,480

 
$
296,483

 
$
(24,245
)
 
$
1,288,911

 
$
500,660

 
$
(17,896
)
 
$
2,043,913

Net income

 

 

 

 
45,110

 

 
45,110

Other comprehensive income (loss)

 

 

 

 

 
10,446

 
10,446

Comprehensive income

 

 

 

 

 

 
55,556

Cash dividends ($0.21 per share)

 

 

 

 
(12,442
)
 

 
(12,442
)
Issuance of common stock for stock-based compensation awards
87,150

 

 
2,655

 
(3,442
)
 

 

 
(787
)
Stock-based compensation expense

 

 

 
2,637

 

 

 
2,637

Balance at March 31, 2019
58,633,630

 
$
296,483

 
$
(21,590
)
 
$
1,288,106

 
$
533,328

 
$
(7,450
)
 
$
2,088,877

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2018
49,321,231

 
$
249,951

 
$
(19,906
)
 
$
898,095

 
$
397,354

 
$
(10,511
)
 
$
1,514,983

Net income

 

 

 

 
33,826

 

 
33,826

Other comprehensive income (loss)

 

 

 

 

 
(6,985
)
 
(6,985
)
Comprehensive income

 

 

 

 

 

 
26,841

Cash dividends ($0.19 per share)

 

 

 

 
(9,455
)
 

 
(9,455
)
Issuance of common stock for stock-based compensation awards
71,747

 

 
1,610

 
(3,092
)
 

 

 
(1,482
)
Stock-based compensation expense

 

 

 
1,858

 

 

 
1,858

Other, net

 

 

 
20

 

 

 
20

Balance at March 31, 2018
49,392,978

 
$
249,951

 
$
(18,296
)
 
$
896,881

 
$
421,725

 
$
(17,496
)
 
$
1,532,765

See Notes to Consolidated Financial Statements.

4


Renasant Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands)
 
Three Months Ended March 31,
 
2019
 
2018
Operating activities
 
 
 
Net income
$
45,110

 
$
33,826

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Provision for loan losses
1,500

 
1,750

Depreciation, amortization and accretion
409

 
650

Deferred income tax expense
5,949

 
1,990

Funding of mortgage loans held for sale
(384,103
)
 
(362,803
)
Proceeds from sales of mortgage loans held for sale
416,032

 
275,445

Gains on sales of mortgage loans held for sale
(7,888
)
 
(8,798
)
Gains on sales of securities
(13
)
 

(Gains) losses on sales of premises and equipment
(89
)
 
8

Stock-based compensation expense
2,637

 
1,858

Payments on and proceeds from sales of other loans held for sale
70,375

 

Decrease in other assets
5,982

 
9,623

Increase in other liabilities
(15,794
)
 
(14,720
)
Net cash provided by (used in) operating activities
140,107

 
(61,171
)
Investing activities
 
 
 
Purchases of securities available for sale
(49,577
)
 
(317,922
)
Proceeds from sales of securities available for sale
10,611

 

Proceeds from call/maturities of securities available for sale
48,509

 
29,335

Net increase in loans
(808
)
 
(74,344
)
Purchases of premises and equipment
(7,242
)
 
(4,384
)
Proceeds from sales of premises and equipment
135

 

Proceeds from sales of FHLB stock
10,441

 

Proceeds from sales of other assets
12,965

 
2,085

Other, net
(104
)
 

Net cash provided by (used in) investing activities
24,930

 
(365,230
)
Financing activities
 
 
 
Net increase in noninterest-bearing deposits
47,517

 
20,712

Net increase in interest-bearing deposits
93,175

 
416,759

Net decrease in short-term borrowings
(300,116
)
 
(32,061
)
Repayment of long-term debt
(216
)
 
(230
)
Cash paid for dividends
(12,442
)
 
(9,455
)
Net stock-based compensation transactions

 
201

Net cash (used in) provided by financing activities
(172,082
)
 
395,926

Net decrease in cash and cash equivalents
(7,045
)
 
(30,475
)
Cash and cash equivalents at beginning of period
569,111

 
281,453

Cash and cash equivalents at end of period
$
562,066

 
$
250,978

Supplemental disclosures
 
 
 
Cash paid for interest
$
23,887

 
$
12,656

Cash paid for income taxes
$
5,325

 
$
6,280

Noncash transactions:
 
 
 
Transfers of loans to other real estate owned
$
885

 
$
1,154

Financed sales of other real estate owned
$
120

 
$
418

Transfers of loans held for sale to loans held for investment
$

 
$
442

Recognition of operating right-of-use assets
$
54,338

 
$

Recognition of operating lease liabilities
$
57,857

 
$


See Notes to Consolidated Financial Statements.

5


Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Summary of Significant Accounting Policies

(In Thousands)
Nature of Operations: Renasant Corporation (referred to herein as the “Company”) owns and operates Renasant Bank (“Renasant Bank” or the “Bank”) and Renasant Insurance, Inc. (“Renasant Insurance”). The Company offers a diversified range of financial, wealth management and insurance services to its retail and commercial customers through its subsidiaries and full service offices located throughout north and central Mississippi, Tennessee, Georgia, Alabama and north Florida.
Basis of Presentation: The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain prior year amounts have been reclassified to conform to the current year presentation. For further information regarding the Company’s significant accounting policies, refer to the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission on February 28, 2019.
Business Combinations: The Company completed its acquisition of Brand Group Holdings, Inc. (“Brand”) on September 1, 2018. The acquired institution’s financial condition and results of operations are included in the Company’s financial condition and results of operations as of the acquisition date. Due to the timing of the system conversion and the integration of operations into the Company’s existing operations, historical reporting for acquired operations is impracticable, and, therefore, disclosure of the amounts of revenue and expenses of the acquired institution since the acquisition date is impracticable.
In connection with the acquisition of Brand, the Company acquired a portfolio of non-mortgage consumer loans, which is included in the line item “Loans held for sale” on the Company’s Consolidated Balance Sheet with a balance of $122,756 as of March 31, 2019. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 850, “Business Combinations”, these loans were measured at fair value as of the acquisition date. Subsequent to the acquisition date, these loans are carried at the lower of amortized cost or fair value.
Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates, and such differences may be material.

Impact of Recently-Issued Accounting Standards and Pronouncements:
In February 2016, FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”, which amends the accounting model and disclosure requirements for leases. Topic 842 was subsequently amended by the following updates: ASU 2018-01, “Land Easement Practical Expedient for Transition to Topic 842”, ASU 2018-10, “Codification Improvements to Topic 842, Leases”, and ASU 2018-11, “Targeted Improvements” (collectively, “ASC 842”). The current accounting model for leases distinguishes between capital leases, which are recognized on the balance sheet, and operating leases, which are not.  Under the new standard, the lease classifications are defined as finance leases, which are similar to capital leases under current GAAP, and operating leases.  Further, a lessee will recognize a lease liability and a right-of-use asset for all leases with a term greater than 12 months on its balance sheet regardless of the lease’s classification, which may significantly increase reported assets and liabilities.  The accounting model and disclosure requirements for lessors remains substantially unchanged from current GAAP.  This standard became effective on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. The Company chose to use the effective date approach and, as such, all periods presented after January 1, 2019 are in accordance with ASC 842 whereas periods presented prior to January 1, 2019 are in accordance with prior lease accounting. Financial information was not updated, and the disclosures required under ASC 842, were not provided for dates and periods before January 1, 2019. The Company recorded a right-of-use asset in the amount of $53,042 and a corresponding lease liability in the amount of $56,562. The Company has included newly applicable lease disclosures in this filing in Note 19, “Leases.”
In June 2016, FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This update will significantly change the way entities recognize impairment on many financial assets by requiring immediate recognition of estimated credit losses expected to occur over the asset’s remaining life.

6


FASB describes this impairment recognition model as the current expected credit loss (“CECL”) model and believes the CECL model will result in more timely recognition of credit losses since the CECL model incorporates expected credit losses versus incurred credit losses. The scope of FASB’s CECL model includes loans, held-to-maturity debt instruments, lease receivables, loan commitments and financial guarantees that are not accounted for at fair value. For public companies, this update is effective for interim and annual periods beginning after December 15, 2019. The Company has formed an implementation committee comprised of both accounting and credit employees to guide Renasant Bank through the implementation of ASU 2016-13. The Company has also engaged a third party to act as a consultant and software provider to assist in the implementation of the CECL model. The implementation committee and the consultant have established the CECL blueprint for Renasant Bank, which includes the selected methodology, proper pool segmentation and loan data validation. Currently, the CECL committee is working with the consultant to build the CECL model and expects to run a preliminary CECL calculation in the second quarter of 2019.
In January 2017, FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350)” (“ASU 2017-04”). ASU 2017-04 will amend and simplify current goodwill impairment testing by eliminating certain testing under the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the quantitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. ASU 2017-04 will be effective for interim and annual periods beginning after December 15, 2019 and is not expected to have a material impact on the Company’s financial statements.
In March 2017, FASB issued ASU 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities” (“ASU 2017-08”). ASU 2017-08 requires the amortization period for certain callable debt securities held at a premium to be the earliest call date.  ASU 2017-08 became effective January 1, 2019 and did not have a material impact on the Company’s financial statements.
In August 2017, FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). ASU 2017-12 is intended to simplify hedge accounting by eliminating the requirement to separately measure and report hedge effectiveness. ASU 2017-12 also seeks to expand the application of hedge accounting by modifying current requirements to include hedge accounting on partial-term hedges, the hedging of prepayable financial instruments and other strategies.  This update became effective January 1, 2019 and did not have a material impact on the Company’s financial statements.
In August 2018, FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 is intended to improve the disclosures on fair value measurements by eliminating, amending and adding certain disclosure requirements. These changes are intended to reduce costs for preparers while providing more useful information for financial statement users.   ASU 2018-13 will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted.  The Company is currently evaluating the effect that ASU 2018-13 will have on its financial position and results of operations and its financial statement disclosures.
In March 2019, FASB issued ASU 2019-01, “Leases (Topic 842): Codification Improvements” (“ASU 2019-01”). ASU 2019-01 is intended to clarify potential implementation questions related to ASC 842. This includes clarification on the determination of fair value of underlying assets by lessors that are not manufacturers or dealers, cash flow presentation of sales-type and direct financing leases and transition disclosures related to accounting changes and error corrections.  ASU 2019-01 will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted.  The Company is currently evaluating the effect that ASU 2019-01 will have on its financial position and results of operations and its financial statement disclosures.
Note 2 – Mergers and Acquisitions
(Dollar Amounts In Thousands, Except Share Data)
Acquisition of Brand Group Holdings, Inc.

Effective September 1, 2018, the Company completed its acquisition by merger of Brand, the parent company of The Brand Banking Company (“Brand Bank”), in a transaction valued at approximately $474,453. The Company issued 9,306,477 shares of common stock and paid approximately $21,879 to Brand shareholders, excluding cash paid for fractional shares, and paid approximately $17,157, net of tax benefit, to Brand stock option holders for 100% of the voting equity interest in Brand. At closing, Brand merged with and into the Company, with the Company the surviving corporation in the merger; immediately thereafter, Brand Bank merged with and into Renasant Bank, with Renasant Bank the surviving banking corporation in the merger. On September 1, 2018, Brand operated thirteen banking locations throughout the greater Atlanta market.

7


The Company recorded approximately $349,459 in intangible assets which consist of goodwill of $321,925 and a core deposit intangible of $27,534. Goodwill resulted from a combination of revenue enhancements from expansion in existing markets and efficiencies resulting from operational synergies. The fair value of the core deposit intangible is being amortized over the estimated useful life, currently expected to be approximately 10 years. The goodwill is not deductible for income tax purposes.

The following table summarizes the allocation of purchase price to assets and liabilities acquired in connection with the Company’s acquisition of Brand based on their fair values on September 1, 2018.
Purchase Price:
 
 
Shares issued to common shareholders
9,306,477

 
Purchase price per share
$
46.69

 
Value of stock paid
 
$
434,519

Cash consideration paid
 
21,879

Cash paid for fractional shares
 
4

Cash settlement for stock options, net of tax benefit
 
17,157

Deal charges
 
894

  Total Purchase Price
 
$
474,453

Net Assets Acquired:
 
 
Stockholders’ equity at acquisition date
$
138,896

 
Increase (decrease) to net assets as a result of fair value adjustments
to assets acquired and liabilities assumed:
 
 
  Securities
(231
)
 
  Loans, including loans held for sale
(20,969
)
 
  Premises and equipment
910

 
  Intangible assets
27,534

 
  Other assets
(3,304
)
 
  Deposits
(1,367
)
 
  Borrowings
(3,236
)
 
  Other liabilities
13,338

 
  Deferred income taxes
957

 
     Total Net Assets Acquired
 
152,528

     Goodwill resulting from merger(1)
 
$
321,925

(1) The goodwill resulting from the merger has been assigned to the Community Banks operating segment.

The following table summarizes the estimated fair value on September 1, 2018 of assets acquired and liabilities assumed on that date in connection with the merger with Brand. These estimates are subject to change pending the finalization of all valuations.

Cash and cash equivalents
 
$
193,436

Securities
 
71,246

Loans, including loans held for sale
 
1,589,195

Premises and equipment
 
20,070

Intangible assets
 
349,459

Other assets
 
112,066

Total assets
 
$
2,335,472

 
 
 
Deposits
 
$
1,714,177

Borrowings
 
90,912

Other liabilities
 
55,930

Total liabilities
 
$
1,861,019



8


As part of the merger agreement, Brand agreed to divest the operations of its subsidiary Brand Mortgage Group, LLC (“BMG”), which was completed as of October 31, 2018. As a result, the balance sheet and results of operations of BMG, which the Company considers to be immaterial to the overall results of the Company, were included in the Company's balance sheet and results of operations from September 1, 2018 to October 31, 2018. The following table summarizes the significant assets acquired and liabilities assumed from BMG:
 
 
September 1, 2018

Loans held for sale
 
$
48,100

Borrowings
 
34,139


Supplemental Pro Forma Combined Condensed Results of Operations
The following unaudited pro forma combined condensed consolidated financial information presents the results of operations for the three months ended March 31, 2019 and 2018 of the Company as though the Brand merger had been completed as of January 1, 2018. The unaudited pro forma information combines the historical results of Brand with the Company’s historical consolidated results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the periods presented. The pro forma information is not necessarily indicative of what would have occurred had the acquisition taken place on January 1, 2018. The pro forma information does not include the effect of any cost-saving or revenue-enhancing strategies. Merger expenses are reflected in the period in which they were incurred.
 
(Unaudited)
 
Three Months Ended
 
March 31,
 
2019
 
2018
Net interest income - pro forma
$
113,147

 
$
111,618

 
 
 
 
Noninterest income - pro forma
$
35,885

 
$
42,497

 
 
 
 
Noninterest expense - pro forma
$
88,832

 
$
99,774

 
 
 
 
Net income - pro forma
$
45,110

 
$
40,296

 
 
 
 
Earnings per share - pro forma:
 
 
 
Basic
$
0.77

 
$
0.69

Diluted
$
0.77

 
$
0.69




9

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


Note 3 – Securities
(In Thousands, Except Number of Securities)

The amortized cost and fair value of securities available for sale were as follows as of the dates presented:
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
March 31, 2019
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
2,532

 
$
16

 
$
(23
)
 
$
2,525

Obligations of states and political subdivisions
179,758

 
4,064

 
(60
)
 
183,762

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
622,056

 
3,783

 
(3,773
)
 
622,066

Government agency collateralized mortgage obligations
321,088

 
1,093

 
(2,734
)
 
319,447

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
21,816

 
362

 
(180
)
 
21,998

Government agency collateralized mortgage obligations
46,095

 
273

 
(38
)
 
46,330

Trust preferred securities
12,259

 

 
(2,013
)
 
10,246

Other debt securities
48,335

 
766

 
(122
)
 
48,979

 
$
1,253,939

 
$
10,357

 
$
(8,943
)
 
$
1,255,353

 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
December 31, 2018
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
2,536

 
$
13

 
$
(38
)
 
$
2,511

Obligations of states and political subdivisions
200,798

 
3,038

 
(567
)
 
203,269

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
621,690

 
719

 
(9,126
)
 
613,283

Government agency collateralized mortgage obligations
332,697

 
274

 
(5,982
)
 
326,989

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
21,957

 
257

 
(384
)
 
21,830

Government agency collateralized mortgage obligations
28,446

 
24

 
(135
)
 
28,335

Trust preferred securities
12,359

 

 
(1,726
)
 
10,633

Other debt securities
44,046

 
192

 
(311
)
 
43,927

 
$
1,264,529

 
$
4,517

 
$
(18,269
)
 
$
1,250,777


Securities sold were as follows for the period presented:
 
Carrying Value
 
Net Proceeds
 
Gain/(Loss)
Three months ended March 31, 2019
 
 
 
 
 
Obligations of states and political subdivisions
$
10,368

 
$
10,384

 
$
16

Residential mortgage backed securities:
 
 
 
 
 
Government agency mortgage backed securities
230

 
227

 
$
(3
)
 
$
10,598

 
$
10,611

 
$
13


10

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


There were no securities sold during the three months ended March 31, 2018.
Gross realized gains and losses on sales of securities available for sale for three months ended March 31, 2019 and 2018, respectively, were as follows:
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
 
Gross gains on sales of securities available for sale
$
45

 
$

 
Gross losses on sales of securities available for sale
(32
)
 

 
Gains on sales of securities available for sale, net
$
13

 
$

 

At March 31, 2019 and December 31, 2018, securities with a carrying value of $553,451 and $619,308, respectively, were pledged to secure government, public and trust deposits. Securities with a carrying value of $19,629 and $18,299 were pledged as collateral for short-term borrowings and derivative instruments at March 31, 2019 and December 31, 2018, respectively.
The amortized cost and fair value of securities at March 31, 2019 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.
 
 
 
Available for Sale
 
 
Amortized
Cost
 
Fair
Value
Due within one year
 
$
36,647

 
$
36,919

Due after one year through five years
 
40,168

 
40,856

Due after five years through ten years
 
74,651

 
76,630

Due after ten years
 
51,868

 
50,926

Residential mortgage backed securities:
 
 
 
 
Government agency mortgage backed securities
 
622,056

 
622,066

Government agency collateralized mortgage obligations
 
321,088

 
319,447

Commercial mortgage backed securities:
 
 
 
 
Government agency mortgage backed securities
 
21,816

 
21,998

Government agency collateralized mortgage obligations
 
46,095

 
46,330

Other debt securities
 
39,550

 
40,181

 
 
$
1,253,939

 
$
1,255,353



11

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)




The following table presents the age of gross unrealized losses and fair value by investment category as of the dates presented:
 
 
Less than 12 Months
 
12 Months or More
 
Total
 
#
 
Fair
Value
 
Unrealized
Losses
 
#
 
Fair
Value
 
Unrealized
Losses
 
#
 
Fair
Value
 
Unrealized
Losses
Available for Sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
0
 
$

 
$

 
2
 
$
1,494

 
$
(23
)
 
2
 
$
1,494

 
$
(23
)
Obligations of states and political subdivisions
1
 
855

 
(1
)
 
10
 
7,309

 
(59
)
 
11
 
8,164

 
(60
)
Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
10
 
28,824

 
(72
)
 
96
 
242,222

 
(3,701
)
 
106
 
271,046

 
(3,773
)
Government agency collateralized mortgage obligations
3
 
16,043

 
(41
)
 
64
 
159,212

 
(2,693
)
 
67
 
175,255

 
(2,734
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
0
 

 

 
4
 
7,543

 
(180
)
 
4
 
7,543

 
(180
)
Government agency collateralized mortgage obligations
0
 

 

 
1
 
4,962

 
(38
)
 
1
 
4,962

 
(38
)
Trust preferred securities
0
 

 

 
2
 
10,246

 
(2,013
)
 
2
 
10,246

 
(2,013
)
Other debt securities
8
 
5,763

 
(34
)
 
3
 
5,752

 
(88
)
 
11
 
11,515

 
(122
)
Total
22
 
$
51,485

 
$
(148
)
 
182
 
$
438,740

 
$
(8,795
)
 
204
 
$
490,225

 
$
(8,943
)
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
0
 
$

 
$

 
2
 
$
1,480

 
$
(38
)
 
2
 
$
1,480

 
$
(38
)
Obligations of states and political subdivisions
34
 
22,159

 
(193
)
 
26
 
16,775

 
(374
)
 
60
 
38,934

 
(567
)
Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
91
 
354,731

 
(3,945
)
 
73
 
125,757

 
(5,181
)
 
164
 
480,488

 
(9,126
)
Government agency collateralized mortgage obligations
24
 
97,451

 
(840
)
 
60
 
140,076

 
(5,142
)
 
84
 
237,527

 
(5,982
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
5
 
6,506

 
(74
)
 
4
 
7,468

 
(310
)
 
9
 
13,974

 
(384
)
Government agency collateralized mortgage obligations
2
 
9,950

 
(23
)
 
1
 
4,888

 
(112
)
 
3
 
14,838

 
(135
)
Trust preferred securities
0
 

 

 
2
 
10,633

 
(1,726
)
 
2
 
10,633

 
(1,726
)
Other debt securities
12
 
19,011

 
(88
)
 
3
 
5,621

 
(223
)
 
15
 
24,632

 
(311
)
Total
168
 
$
509,808

 
$
(5,163
)
 
171
 
$
312,698

 
$
(13,106
)
 
339
 
$
822,506

 
$
(18,269
)
 
The Company evaluates its investment portfolio for other-than-temporary-impairment (“OTTI”) on a quarterly basis. Impairment is assessed at the individual security level. The Company considers an investment security impaired if the fair value of the security is less than its cost or amortized cost basis. Impairment is considered to be other-than-temporary if the Company intends to sell the investment security or if the Company does not expect to recover the entire amortized cost basis of the security before the Company is required to sell the security or before the security’s maturity.

The Company does not intend to sell any securities in an unrealized loss position that it holds, and it is not more likely than not that the Company will be required to sell any such security prior to the recovery of its amortized cost basis, which may be at maturity. Furthermore, even though a number of these securities have been in a continuous unrealized loss position for a period

12

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


greater than twelve months, the Company is collecting principal and interest payments from the respective issuers as scheduled. As such, the Company did not record any OTTI for the three months ended March 31, 2019 or 2018.
The Company holds investments in pooled trust preferred securities that had an amortized cost basis of $12,259 and $12,359 and a fair value of $10,246 and $10,633 at March 31, 2019 and December 31, 2018, respectively. At March 31, 2019, the investments in pooled trust preferred securities consisted of two securities representing interests in various tranches of trusts collateralized by debt issued by over 150 financial institutions. Management’s determination of the fair value of each of its holdings in pooled trust preferred securities is based on the current credit ratings, the known deferrals and defaults by the underlying issuing financial institutions and the degree to which future deferrals and defaults would be required to occur before the cash flow for the Company’s tranches is negatively impacted. In addition, management continually monitors key credit quality and capital ratios of the issuing institutions. This determination is further supported by quarterly valuations, which are performed by third parties, of each security obtained by the Company. The Company does not intend to sell the investments before recovery of the investments’ amortized cost, and it is not more likely than not that the Company will be required to sell the investments before recovery of the investments’ amortized cost, which may be at maturity. At March 31, 2019, management did not, and does not currently, believe such securities will be settled at a price less than the amortized cost of the investment, but the Company previously concluded that it was probable that there had been an adverse change in estimated cash flows for both trust preferred securities and recognized credit related impairment losses on these securities in 2011. No additional impairment was recognized during the three months ended March 31, 2019.
The following table provides information regarding the Company’s investments in pooled trust preferred securities at March 31, 2019:
 
Name
Single/
Pooled
 
Class/
Tranche
 
Amortized
Cost
 
Fair
Value
 
Unrealized
Loss
 
Lowest
Credit
Rating
 
Issuers
Currently in
Deferral or
Default
XXIII
Pooled
 
B-2
 
$
8,233

 
$
6,593

 
$
(1,640
)
 
BB
 
17
%
XXVI
Pooled
 
B-2
 
4,026

 
3,653

 
(373
)
 
B
 
20
%
 
 
 
 
 
$
12,259

 
$
10,246

 
$
(2,013
)
 
 
 
 

The following table provides a summary of the cumulative credit related losses recognized in earnings for which a portion of OTTI has been recognized in other comprehensive income:
 
 
2019
 
2018
Balance at January 1
$
(261
)
 
$
(261
)
Additions related to credit losses for which OTTI was not previously recognized

 

Increases in credit loss for which OTTI was previously recognized

 

Reductions for securities sold during the period

 

Balance at March 31
$
(261
)
 
$
(261
)


13

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


Note 4 – Non Purchased Loans
(In Thousands, Except Number of Loans)

For purposes of this Note 4, all references to “loans” mean non purchased loans.

The following is a summary of non purchased loans and leases as of the dates presented:
 
 
March 31,
2019
 
December 31, 2018
Commercial, financial, agricultural
$
921,081

 
$
875,649

Lease financing
61,539

 
64,992

Real estate – construction
651,119

 
635,519

Real estate – 1-4 family mortgage
2,114,908

 
2,087,890

Real estate – commercial mortgage
2,726,186

 
2,628,365

Installment loans to individuals
93,654

 
100,424

Gross loans
6,568,487

 
6,392,839

Unearned income
(2,888
)
 
(3,127
)
Loans, net of unearned income
$
6,565,599

 
$
6,389,712


Past Due and Nonaccrual Loans
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Generally, the recognition of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer and other retail loans are typically charged-off no later than the time the loan is 120 days past due. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. All interest accrued for the current year, but not collected, for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

14

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


The following table provides an aging of past due and nonaccrual loans, segregated by class, as of the dates presented:
 
 
Accruing Loans
 
Nonaccruing Loans
 
 
 
30-89 Days
Past Due
 
90 Days
or More
Past Due
 
Current
Loans
 
Total
Loans
 
30-89 Days
Past Due
 
90 Days
or More
Past Due
 
Current
Loans
 
Total
Loans
 
Total
Loans
March 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
3,117

 
$
78

 
$
913,608

 
$
916,803

 
$
953

 
$
3,145

 
$
180

 
$
4,278

 
$
921,081

Lease financing
440

 

 
61,009

 
61,449

 

 
90

 

 
90

 
61,539

Real estate – construction
419

 

 
650,700

 
651,119

 

 

 

 

 
651,119

Real estate – 1-4 family mortgage
16,333

 
1,044

 
2,093,721

 
2,111,098

 
1,056

 
1,466

 
1,288

 
3,810

 
2,114,908

Real estate – commercial mortgage
2,394

 
13

 
2,719,516

 
2,721,923

 

 
2,349

 
1,914

 
4,263

 
2,726,186

Installment loans to individuals
392

 
57

 
93,139

 
93,588

 
2

 
64

 

 
66

 
93,654

Unearned income

 

 
(2,888
)
 
(2,888
)
 

 

 

 

 
(2,888
)
Total
$
23,095

 
$
1,192

 
$
6,528,805

 
$
6,553,092

 
$
2,011

 
$
7,114

 
$
3,382

 
$
12,507

 
$
6,565,599

December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
3,397

 
$
267

 
$
870,457

 
$
874,121

 
$

 
$
1,356

 
$
172

 
$
1,528

 
$
875,649

Lease financing
607

 
89

 
64,296

 
64,992

 

 

 

 

 
64,992

Real estate – construction
887

 

 
634,632

 
635,519

 

 

 

 

 
635,519

Real estate – 1-4 family mortgage
10,378

 
2,151

 
2,071,401

 
2,083,930

 
238

 
2,676

 
1,046

 
3,960

 
2,087,890

Real estate – commercial mortgage
1,880

 
13

 
2,621,902

 
2,623,795

 

 
2,974

 
1,596

 
4,570

 
2,628,365

Installment loans to individuals
368

 
165

 
99,731

 
100,264

 
3

 
157

 

 
160

 
100,424

Unearned income

 

 
(3,127
)
 
(3,127
)
 

 

 

 

 
(3,127
)
Total
$
17,517

 
$
2,685

 
$
6,359,292

 
$
6,379,494

 
$
241

 
$
7,163

 
$
2,814

 
$
10,218

 
$
6,389,712

Impaired Loans
A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is measured on a loan-by-loan basis for commercial, consumer and construction loans of $500 or more by, as applicable, the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are evaluated collectively for impairment. When the ultimate collectability of an impaired loan’s principal is in doubt, wholly or partially, the loan is placed on nonaccrual status and all cash receipts are applied to principal. Once the recorded balance has been reduced to zero, future cash receipts are applied to interest income, to the extent any interest has been foregone, and then they are recorded as recoveries of any amounts previously charged-off. For impaired loans, a specific reserve is established to adjust the carrying value of the loan to its estimated net realizable value.

15

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


Loans accounted for under FASB ASC 310-20, “Nonrefundable Fees and Other Cost” (“ASC 310-20”), and which are impaired loans recognized in conformity with ASC 310, “Receivables” (“ASC 310”), segregated by class, were as follows as of the dates presented:
 
 
Unpaid
Contractual
Principal
Balance
 
Recorded
Investment
With
Allowance
 
Recorded
Investment
With No
Allowance
 
Total
Recorded
Investment
 
Related
Allowance
March 31, 2019
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
4,886

 
$
4,581

 
$

 
$
4,581

 
$
983

Lease financing
90

 
90

 

 
90

 
1

Real estate – construction
8,485

 
6,320

 
2,165

 
8,485

 
56

Real estate – 1-4 family mortgage
8,739

 
8,415

 

 
8,415

 
113

Real estate – commercial mortgage
9,800

 
5,819

 
1,198

 
7,017

 
723

Installment loans to individuals
136

 
129

 

 
129

 
1

Total
$
32,136

 
$
25,354

 
$
3,363

 
$
28,717

 
$
1,877

December 31, 2018
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
2,280

 
$
1,834

 
$

 
$
1,834

 
$
163

Lease financing

 

 

 

 

Real estate – construction
9,467

 
7,302

 
2,165

 
9,467

 
63

Real estate – 1-4 family mortgage
9,767

 
9,077

 

 
9,077

 
61

Real estate – commercial mortgage
8,625

 
4,609

 
1,238

 
5,847

 
689

Installment loans to individuals
232

 
223

 

 
223

 
1

Totals
$
30,371

 
$
23,045

 
$
3,403

 
$
26,448

 
$
977


The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented:
 
Three Months Ended
 
Three Months Ended
 
March 31, 2019
 
March 31, 2018
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
4,634

 
$
10

 
$
2,338

 
$
11

Lease financing
87

 

 
159

 

Real estate – construction
8,485

 
102

 
150

 
18

Real estate – 1-4 family mortgage
8,490

 
51

 
8,197

 
67

Real estate – commercial mortgage
7,030

 
28

 
6,670

 
92

Installment loans to individuals
149

 
1

 
104

 
1

Total
$
28,875

 
$
192

 
$
17,618

 
$
189

 
 
 
 
 
 
 
 

Restructured Loans
Restructured loans are those for which concessions have been granted to the borrower due to a deterioration of the borrower’s financial condition and which are performing in accordance with the new terms. Such concessions may include reduction in interest rates or deferral of interest or principal payments. In evaluating whether to restructure a loan, management analyzes the long-term financial condition of the borrower, including guarantor and collateral support, to determine whether the proposed concessions will increase the likelihood of repayment of principal and interest.
The tables below illustrate the impact of modifications classified as restructured loans which were made during the periods presented and held on the Consolidated Balance Sheets at the respective period end. There were no newly restructured loans during the three months ended March 31, 2019.

16

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


 
 
 
 
 
 
 
 
Number of
Loans
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Three months ended March 31, 2018
 
 
 
 
 
Real estate – 1-4 family mortgage
3

 
$
576

 
$
576

Real estate – commercial mortgage
1

 
83

 
78

Total
4

 
$
659

 
$
654


With respect to loans that were restructured during the three months ended March 31, 2018, none have subsequently defaulted within twelve months of the restructuring.

Restructured loans not performing in accordance with their restructured terms that are either contractually 90 days or more past due or placed on nonaccrual status are reported as nonperforming loans. There were no restructured loans contractually 90 days past due or more and still accruing at March 31, 2019 and four restructured loans in the amount of $571 contractually 90 days past due or more and still accruing at March 31, 2018. The outstanding balance of restructured loans on nonaccrual status was $2,976 and $2,570 at March 31, 2019 and March 31, 2018, respectively.

Changes in the Company’s restructured loans are set forth in the table below:
 
 
Number of
Loans
 
Recorded
Investment
Totals at January 1, 2019
51

 
$
5,325

Additional advances or loans with concessions

 
2

Reclassified as performing restructured loan
1

 
40

Reductions due to:
 
 
 
Paid in full
(1
)
 
(160
)
Principal paydowns

 
(45
)
Totals at March 31, 2019
51

 
$
5,162


The allocated allowance for loan losses attributable to restructured loans was $32 and $92 at March 31, 2019 and March 31, 2018, respectively. The Company had $44 and $20 in remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2019 and March 31, 2018, respectively.
Credit Quality
For commercial and commercial real estate loans, internal risk-rating grades are assigned by lending, credit administration or loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan. Management analyzes the resulting ratings, as well as other external statistics and factors such as delinquency, to track the migration performance of the portfolio balances of these loans. Loan grades range between 1 and 9, with 1 being loans with the least credit risk. Loans within the “Pass” grade (historically, those with a risk rating between 1 and 4) generally have a lower risk of loss and therefore a lower risk factor applied to the loan balances. Management has established more granular risk rating categories to better identify heightened credit risk as loans migrate downward in the risk rating system. The “Pass” grade is now reserved for loans with a risk rating between 1 and 4A, and the “Watch” grade (those with a risk rating of 4B and 4E) is utilized on a temporary basis for “Pass” grade loans where a significant adverse risk-modifying action is anticipated in the near term. Loans that migrate toward the “Substandard” grade (those with a risk rating between 5 and 9) generally have a higher risk of loss and therefore a higher risk factor applied to the related loan balances. The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented:
 

17

Renasant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)


 
Pass
 
Watch
 
Substandard
 
Total
March 31, 2019
 
 
 
 
 
 
 
Commercial, financial, agricultural
$